Economist tackles EU over blocked Tetra Laval deal

Related tags Tetra laval European union

An economist has criticised Europe's antitrust watchdog saying it
botched the analysis of the drinks packaging market, as a landmark
appeal by the Swiss-based Tetra Laval Group got under way.

An economist has criticised Europe's antitrust watchdog saying it botched the analysis of the drinks packaging market, as a landmark appeal by the Swiss-based Tetra Laval Group got under way.

Antitrust experts are watching the case carefully to see if the European Court of Justice will deal another blow to Europe's high-profile antitrust enforcers.

Just last month, the court sharply criticised the European Commission's procedures in a case where it prevented a UK tour operator from acquiring a rival.

The hearing follows the EU Commission's decision in January requiring carton packaging giant Tetra Laval to sell its 95 per cent stake in French packaging and processing equipment maker Sidel.

The EU Commission blocked the $1.5 billion (€1.5bn) merger after finding that it would extend Tetra Laval's dominance and allow it to leverage its strength in newer, plastic bottled sectors.

Tetra Laval is now fighting to have that decision annulled.

An economist representing Tetra Laval told the three-judge court that the EU Commission ignored evidence about the competitive nature of the bottling sector.

He also said the EU Commission failed to back up its assumptions about the equipment needs of packagers of so-called "sensitive" products like milk and fruit juice.

"The Commission focused on a snapshot of market shares and ignored the dynamics (of the market for high-end packaging equipment),"​ said William Bishop of London-based economists Lexecon.

However, an EU Commission lawyer said suspicions that the tie-up would foreclose the market for competitors and ultimately harm drinks consumers were justified.

"The Commission has produced a closely reasoned decision which we stand by,"​ said Anthony Whelan, defending last October's decision to block the merger.

A merged Tetra Laval-Sidel would sell combinations of carton and plastic products that could exclude a handful of far smaller rivals, Whelan argued.

The merged entity would also jointly muster the two groups' research and development strengths to make it possible for it to dominate the market for newer ways of packaging milk and fruit juice by 2005, Whelan said.

Wednesday's hearing is the first of its kind following the European Court of Justice's decision to review appeals of mergers prohibited by the Commission on a fast-track basis. Normal appeals take two to three years. The Tetra Laval hearing will end this week, and a decision is expected by the end of the year.

Related topics Processing & Packaging

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