European Commission imposes conditions on BASF’s acquisition of Ciba

By Guy Montague-Jones

- Last updated on GMT

Related tags: BASF

BASF is now one step closer to acquiring Ciba but had to promise to share cosmetics know-how and sell businesses to get the €3.8bn deal accepted.

While the acquisition was cleared under the EU Merger Regulation, the Commission asked BASF to remedy competition concerns related to the paper, dyestuffs, plastics and skin care sectors.

Potential to be detrimental to competition

The Commission feared that the acquisition deal would impede competition in Europe if it went through in its initial form.

To appease the Commission, BASF offered to sell businesses and share know-how in the sectors where monopoly fears existed.

In the cosmetics industry, the Commission felt the proposed deal would raise competition concerns in the market for UV filters for skin care products.

Commitments to ease competition concerns

BASF therefore promised to conclude a UV Filter License Agreement, giving third party access to the technology behind Tinosorb S (a UV filter patented and currently produced solely by Ciba).

In other markets, BASF agreed to sell certain activities such as Ciba’s entire Chimassorb 119 FL business and its Styrene Acrylic business in Finland.

Competition Commissioner Neelie Kroes was satisfied that the commitments made by BASF were enough to protect competition in the EU.

He said: “I am satisfied that the divestments offered by BASF will ensure that its takeover of Ciba will not harm competition in markets for a range of chemicals used in consumer goods such as skin care products, paper and plastics.”

Commenting on the conditions imposed by the Commission BASF was keen to quantify its commitments. The chemicals company announced yesterday that the conditions apply to products that account for sales of less than €100m in 2008.

Before the acquisition deal is closed BASF must also gain approval from the US Federal Trade Commission. BASF said it was confident of receiving approval by late March, early April.

BASF originally announced the plan to acquire Ciba in September saying the deal would extend significantly its range of products for the plastics and coatings industries.

Related topics: Business & Financial, Financial focus

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