European Commission opens investigation into Mondi, Walki acquisition

03-Sep-2015 - Last updated on 04-Sep-2015 at 11:01 GMT

There is a significant risk of mineral oil migration from recycled fibre-based packaging materials. © Walki Group Oy

The European Commission has opened an in-depth investigation into whether the proposed acquisition by Mondi of two industrial packaging plants owned by Walki is in line with the EU Merger Regulation.

The Commission has concerns Mondi's acquisition could lead to less choice and higher prices for customers of certain packaging materials used for example to transport and protect fresh food or paper.

'Higher prices and less choice'

"The proposed merger could remove a key competitor for several types of packaging material. These are used in everyday items such as food packaging,” said Margrethe Vestager, commissioner in charge of competition policy.

“I am concerned the merger would lead to higher prices and less choice for these companies' clients and the price increases could ultimately be passed on to consumers."

Mondi is a vertically integrated packaging and paper manufacturer which operates a number of plants across Europe manufacturing extrusion coating products.

The two companies are suppliers in the European Economic Area (EEA) of several products derived from extrusion coating, which is a process through which a molten resin is added on to a substrate material.

Coating technique for moisture resistant foil

It is a coating technique that results in a strong and moisture resistant foil employed with a large number of uses, like paper packaging, envelopes, food wrapping and bags, timber wrapping, and insulation materials for construction.

In response, Walki Group, said the European Commission's competition investigation concerning the sale of its two sites, Pietarsaari in Finland and Wroclaw in Poland, has moved to the second phase of investigation.

“We expect the transaction to be completed by the end of 2015,” said Leif Frilund, president/CEO, Walki Group.

He added, after the transaction, Walki will continue to compete in all the current product segment with eight sites, out of which seven are located in Europe.

Reel packaging and barrier lining customers will be served mainly from Valkeakoski in Finland, Steinfurt in Germany, and Haarlem in the Netherlands. Over three meter products will be served from Valkeakoski and Haarlem.

The Commission now has 90 working days, until January 18, 2016 to investigate whether its initial concerns are confirmed.

The transaction was notified to the Commission on 29 July 2015.

Walki Mineral Oil Safe Technology (MOST)

Walki recently launched a Mineral Oil Safe Technology (MOST), a polymer laminate packaging product that provides an effective barrier against mineral-oil contamination.

Walki Pack MOST has been approved for direct food contact, in accordance with EU directive 10/2011.
“This product will enable the food-packing industry to solve the growing issue of contaminated food,” said Stefan Erdmann, technical service & development manager, Barrier Board products, Walki.

Although there are currently no EU standards that regulate MOSH and MOAH, many governments are looking into new legislation. In Germany, laws could be introduced as early as 2016 and are likely to pave the way for EU-wide mineral oil regulations.