The Finnish Competition and Consumer Authority (FCCA) today made a proposal to the Market Court regarding prohibition of a merger between Uponor Oyj and KWH-Yhtymä Oyj. The merger would bring together the two overwhelmingly largest suppliers of plastic pipe systems in Finland and, upon its realisation, the arrangement would lead to a significant reduction in competition, particularly on the plastic infrastructure pipe market. The merger would most likely result in a rise of product prices and an increase in infrastructure construction costs.
Proposal of the prohibition was the only remaining solution available, as the commitments submitted to the FCCA by the involved parties could not be considered as effectively mitigating the adverse effects on competition brought about by the merger. The FCCA cannot impose any terms on the merger that would not be acceptable to the notifying party.
Under the Competition Act, the Market Court issues a decision within three months from the making of the prohibition proposal. The Market Court can either prohibit the merger in accordance with the FCCA proposal, accept the merger as it is, or impose terms on its realisation.
Basis for prohibition: significant reduction in competition
The Market Court decision concerns a notification of concentration submitted to the FCCA on 24 September 2012, which states that Uponor and KWH would transfer all of their infrastructure technology business to a newly established joint venture. Internal pipe system (utilities) business operations are also to be merged with the transfer of KWH's Building Technology business to Uponor as part of the total deal.
Both Uponor and KWH manufacture a wide range of pipe sizes, fittings, wells and other, similar products for use in construction and infrastructure technology. The products are primarily used in the conveyance and distribution of rainwater, sewage, pressurised water and gases as well as to protect various types of cables. Both parties to the merger enjoy extremely strong market positions on several of these markets.
Merger control began in Finland in 1998. This prohibition proposal represents the third such in Finnish history. The first prohibition proposal, which was made in 2000, concerned the acquisition of a joint controlling interest in Digita Oy, a subsidiary of Yleisradio Oy. The second case concerned the prohibition of an asphalt business merger between NCC and Destia in 2011.
The prohibition proposal being made to the Market Court today contains numerous business secrets of both parties. The proposal will be published online after the business secrets have been removed.
Director of Competition Division Timo Mattila tel. +358 29 505 3332
Head of Research Maarit Taurula, tel. +358 29 505 3381
Senior Research Officer Hanna Kaiponen, tel. +358 29 505 3620