Commission approves takeover of BOC by Linde, subject to conditions

The European Commission has approved under the EU Merger Regulation the proposed takeover of the UK-based BOC by the German company Linde. Both companies are active in industrial and specialty gases. The initial market investigation found that the proposed acquisition could have created significant competition problems by removing an important competitor of Linde on a number of gas markets. These competition concerns are removed by the remedy package offered by the parties which includes the divestiture of Linde’s industrial gases business in the UK and BOC’s industrial and specialty gases business in Poland. The approval is further conditional on divesting several helium wholesale supply contracts of both Linde and BOC. Linde will also break its structural link with Air Liquide in a number of Asian Joint Ventures. In the light of these commitments, the Commission has concluded that the proposed operation would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

Competition Commissioner Neelie Kroes said " In view of the remedies offered, we are satisfied that the modified merger would not harm consumers”.

The activities of Linde and BOC overlap on the markets for industrial and specialty gases in Poland and the UK. The transaction would create a dominant player in various Polish gas markets and would strengthen BOC’s dominant position in the UK markets. The parties have, however, committed to divest the whole of BOC’s Polish business and the whole of Linde’s UK business thereby completely removing their overlaps in all relevant Polish and UK markets. The commitments also include the divestiture of Linde’s UK and Irish customer contracts of ethylene oxide that Linde supplies from its Belgian production site The Polish National Competition Authority had requested the partial referral of the case on the ground of the significant impact of the transaction in Poland. However, in view of the substantial commitments offered, the Polish NCA subsequently withdrew its initial referral request.

Linde has only recently entered the wholesale market for helium, after having acquired significant direct access to helium sources, and has competed aggressively to expand its position on this market. The Commission’s market investigation showed that after the acquisition of BOC, one of the three largest global wholesalers, Linde would no longer have the same incentives to compete. The divestiture of important supply contracts of both Linde and BOC will remove these competition concerns. In view of the global scope of the helium wholesale market, the Commission and the US (Fair Trade Commission FTC) cooperated closely during the investigation.

Finally, by making Linde a partner in a number of Asian Joint Ventures currently controlled by Air Liquide and BOC, the transaction would bring about important structural links between the two leading European players. The parties undertook, however, to sever these structural links to a significant extent, thereby eliminating the enhanced risk that, as a result of the merger, there would be an incentive for the leading firms on the market to coordinate their competitive behaviour rather than to compete against each other (i.e. coordinated effects).

More information on the case will be available at: http://ec.europa.eu/comm/competition/mergers/cases/index/m82.html#m_4141