EC clears sale of Linde Kältetechnik

- Last updated on GMT

Related tags: Industrial gas, Linde

The European Commission has approved, under the Merger Regulation,
the acquisition of Linde's refrigeration business (Linde
Kältetechnik) by United Technologies Corporation.

The EC said that the acquisition does not raise competition concerns given the presence of strong competitors, as well as large sophisticated buyers.

The Commission said in a statement that the parties' activities overlap in the field of refrigeration units used in supermarkets and convenience stores for frozen or chilled food as well as for beverages. Those refrigeration units can be divided into remote display cases - big units that rely on external cooling supply and are used in supermarkets - and smaller, plug-in cases that have a built in cooling supply system (e.g. ice cream & bottle coolers).

Although the parties' activities overlap in respect to both products, the Commission has concluded to the absence of serious concerns since even the remote display case market, where the combined market share is highest, will remain sufficiently competitive in Europe.

There are several other, strong, Europe-wide competitors and customers have confirmed that there are a number of alternative suppliers to whom they could switch to without incurring significant costs. The market is also characterised by the presence of large customers with buyer power that can exert pressure on suppliers through bidding contests.

United Technologies Corporation (UTC) is a US-based global and diversified industrial equipment holding company that makes aircraft engines, flight-management systems and elevators among other things. UTC is also active in the refrigeration business through its Carrier group of companies.

Linde​ is an international technology group based in Germany. Its activities include gas, engineering, material handling and refrigeration. The acquisition concerns only Linde AG's refrigeration business, which is called Linde Kältetechnik.

There has been significant change in the European industrial gas sector of late. Air Liquide's​ €2.7 billion acquisition of Messer Griesheim's operations in Germany, the United Kingdom and the United States was completed earlier this year, a move that altered the balance of power within the market.

Prior to the acquisition, Messer and Linde dominated the German market, with Air Liquide a distant third. The acquisition will therefore enormously boost Air Liquide's position in Germany, with the potential to generate sales of almost €1 billion.

The industrial gas business is confident of further growth in the food sector, with new opportunities being identified.

"The transportation of food revolves around gas,"​ said Hans-Dieter Ziegler, food marketing manager for industrial gases group Messer. "Since the introduction of HACCP regulations, many products have to be chilled down during transportation, and this involves the use of gases and equipment. Temperature is now a big issue within the food industry."

Chilling ambient food could be the next gap in the market. Ambient food is shelf-stable produce that usually does not require refrigeration or chilling. Europe, of course, has some of the most stringent food regulations in the world, and some believe the down-chilling of some ambient food during transport is an inevitability.

Related topics: Processing & Packaging

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