Tetra attacks EU veto

Related tags European union

Tetra Laval, the packaging company, has accused the European
competition watchdog of using a "flawed" theory and ignoring
crucial evidence in last year's decision to block its €1.7 billion
takeover of French rival Sidel.

Tetra Laval, the packaging company, has accused the European competition watchdog of using a "flawed" theory and ignoring crucial evidence in last year's decision to block its €1.7 billion takeover of French rival Sidel.

Tetra's attack - in a European Court of Justice hearing on its appeal to the takeover veto - echoes criticisms of the Brussels authorities by companies such as General Electric, whose $43 billion (€44bn) takeover of Honeywell was blocked by the European Commission last year.

During a six-hour discussion marked by sharp exchanges between the parties and tough questioning from the court's three judges, the Commission mounted a robust defence of its decision.

Last year, the Commission concluded the acquisition of Sidel, which produces plastic bottles, would have enabled Tetra - the Swedish maker of Tetra Pak cartons - to have a stranglehold on the market for packaging of drinks. In particular, the ability to offer both cartons and plastic bottles would have given the combined group an unrivalled position.

The court's decision on the Tetra appeal, scheduled for October, is important because it is the first under a new "fast-track" procedure expected to take eight months rather than the usual three years. As a result, if the companies win they will be able to merge.

The decision on Tetra could also limit the use of "leveraging" or "bundling" theories, which have caused controversy in a number of cases such as GE-Honeywell, and could be used by the Commission in its case against Microsoft.

William Bishop, chairman of economic consultancy Lexecon, which acts for Tetra, said the Commission had used a "simple but flawed theory"​. He said it had ignored evidence that Tetra would not have been able to extend its dominant position in cartons to plastic bottles because Sidel faces strong competition.

Anthony Whelan, acting for the Commission, said although Sidel's rivals had increased their market share in the past few years, the French group was still the largest producer of machines to make plastic bottles.

Later, Bo Vesterdorf, the court's president, questioned the Commission's analysis. In a tense exchange with Whelan, he asked: "Is it really the case that the Commission's prognosis is based on reliable and sufficient basis?".

Whelan replied that the Commission's analysis had been thorough and reached the conclusion that plastic bottles compete with cartons for the packaging of products such as milk.

Related topics Processing & Packaging

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