ACCC consults on Sika's proposed divestiture undertaking

The ACCC is seeking views on a proposed court-enforceable divestiture undertaking offered by Sika in relation to its proposed acquisition of MBCC Group.

Sika and MBCC Group supply construction chemicals and materials including chemical admixtures, fibres and concrete works. Chemical admixtures are an essential component in the production of concrete and cement, used to chemically modify its properties.

The ACCC has preliminary concerns that the transaction would substantially lessen competition in Australia in the supply of chemical admixtures by combining the two largest suppliers resulting in a likely market share of approximately 80 per cent.

To address the ACCC's concerns, Sika is offering a court-enforceable undertaking to divest MBCC Group's entire business including its subsidiary, Bluey Technologies in Australia and New Zealand.

This is part of a global remedy being proposed by the parties which would also commit Sika to divest MBCC Group's admixture business in the European Economic Area, Switzerland, United Kingdom, United States and Canada including several research and development facilities.

The MBCC Group businesses would be sold to a single purchaser approved by the ACCC and relevant international competition agencies. The ACCC has liaised closely with other competition agencies in relation to the merger review and remedy proposal.

"In assessing the divestiture undertaking, we must be satisfied it will effectively address our competition concerns in Australia," ACCC Commissioner Stephen Ridgeway said.

"We are seeking views from market participants as to whether the proposed divestiture undertaking would create an effective, independent and long-term competitor to Sika."

"The release of an undertaking for public consultation is consistent with our usual practice and should not be interpreted as an indication that the ACCC will ultimately accept the undertaking and not oppose the transaction," Mr Ridgeway said.

The ACCC invites submissions on the proposed undertaking by 3 February 2023.

More information, including the divestiture undertaking proposed by Sika is available on the ACCC's public register.

Background

Sika AG is a Switzerland-based specialty chemicals company that develops and produces systems and products for bonding, sealing, damping, reinforcing, and protecting in the building sector and motor vehicle industry. Sika has subsidiaries in 101 countries around the world and manufactures in over 300 factories. In Australia, Sika operates through its subsidiary, Sika Australia Pty Ltd.

MBCC Group, formerly BASF Construction Chemicals, is a global supplier in construction chemicals. MBCC Group is headquartered in Germany and has operations in over 60 countries with more than 130 production facilities. In Australia, MBCC Group operates through MB Solutions Australia Pty Ltd and its subsidiary, Bluey Technologies Pty Ltd.

Chemical admixtures are an essential component in the production of concrete and cement, used to chemically modify its properties. Chemical admixtures increase workability, the acceleration or retardation of the rate of hydration and to add resistance to freezing and thawing. A combination of different chemical admixtures is commonly used in a single batch of concrete or cement as they add different properties to the mix.

The ACCC is liaising with relevant international competition agencies in Canada, New Zealand, United Kingdom, United States and the European Union.

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