UK’s Competition and Markets Authority raises concerns over Cargotec-Konecranes merger

UK’s Competition and Markets Authority raises concerns over Cargotec-Konecranes merger
The CMA claims the merger could lead to worse services or higher prices for terminals

The UK’s Competition and Markets Authority (CMA) has provisionally found that the merger between Cargotec and Konecranes would lead to a significant reduction in competition in the supply of a range of container handling equipment products.

The organisation claims that the anticipated merger would lead to a significant lessening of competition in the supply of rubber-tyred gantry (RTG) cranes, automated stacking cranes (ASCs), reachstackers, heavy-duty forklifts, empty container handlers, straddle carriers and shuttle carriers.

Martin Coleman, chair of the CMA inquiry group, said: “We are currently concerned that this merger could lead to a reduced quality of service or higher prices for port terminals and other customers of container handling equipment.

“Our competition concerns need to be addressed to ensure that these customers are not worse off as a result of the deal, and there is no negative impact on UK consumers and businesses.”

This is the first phase 2 investigation that the CMA has conducted in parallel with a review by the European Commission since Britain left the EU, with the analysis specifically focusing on how the merger affects people and businesses within the UK.

The investigation studied data on bidding for previous contracts and many of the merging businesses’ internal documents that show how they assess competition in the sector.

The CMA has also engaged with a wide range of customers, competitors and other industry players to inform its provisional findings.

According to the organisation, British customers would have few remaining alternative suppliers after the merger because both Cargotec and Konecranes are major suppliers of container handling equipment, competing closely for business in the UK.

While Cargotec and Konecranes have suggested that there would be an increased competitive threat from Chinese suppliers in future, the independent inquiry group found that this would not be sufficient to prevent the significant loss of competition that the merger of two key established suppliers would bring about.

The CMA has asked for responses from interested parties to its provisional findings by 17 December 17, 2021, and its notice of possible remedies, which sets out potential options for addressing its provisional concerns, by December 10, 2021.

These will be considered ahead of the CMA issuing its final report, which is due by April 1, 2022.

In a statement, Cargotec and Konecranes noted that they disagree with the CMA’s provisional conclusions. They will consider the contents of the CMA’s initial findings and continue to engage with the CMA.

The pair will also continue the dialogue and cooperation with other relevant competition authorities, including European Commission and the US Department of Justice, and are considering ways to mitigate some of the concerns raised by the different competition authorities.

The Finnish companies reiterated that they are confident that the merger will be completed by the end of the first half of 2022.