Industry News

Merging chemical firms are warned about prices

Published on 2002-12-18. Author : SpecialChem


The Fair Trade Commission said Monday it has instructed Sumitomo Chemical Co. and Mitsui Chemicals Inc. to prevent their planned integration from impacting prices of three chemical products.

The antitrust watchdog gave the green light to the business integration, scheduled for October 2003, on condition the request is honored.

The measures, to be taken within two years of the integration, are expected to be effective in preventing the merged business from limiting price competition in violation of the Antimonopoly Law, it said. The merged company is expected to be the nation's biggest chemical firm in terms of sales, overtaking Mitsubishi Chemical Corp.

A joint holding company, called Sumitomo Mitsui Chemical Co., will assume responsibility for managing Sumitomo Chemical, Mitsui Chemicals and their group companies.

The holding firm will then absorb all the companies under its management at the end of March 2004 to complete the integration.

The merged firm will cover 90 percent of the aniline market, worth 14 billion yen in 2001; 95 percent of resorcin sales, worth 3 billion yen; and 85 percent of the meta/para cresol market, worth 3 billion yen.

The FTC also took into account the absence of substantial competitors and lack of pressure from imports in advising the chemical makers.

In response, the two companies pledged to offer by long-term contracts certain amounts of the products to existing or potential rivals at prices equivalent to costs.

The amounts to be offered per annum are 9,000 tons for aniline, 1,600 tons for resorcin and 5,000 tons for meta/para cresol, it said.

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