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EC clears NKT's acquisition of ABB's cable business

By: Tom Russell 28/02/2017 EC

General Interconnectors Substations Windfarms

The European Commission (EC) has cleared under the EU Merger Regulation the proposed acquisition of ABB's high voltage cable business and power cable accessories business by NKT. The Commission concluded that the merged entity would continue to face effective competition in Europe.

The two companies announced the sale of ABB's high voltage business in September 2016. Both NKT and ABB's cable businesses develop and supply power cables and associated accessories for the offshore market, including offshore wind. In its announcement NKT informed of its intentions to split its business into two separately listed companies, NKT Cables (including ABB HV Cables and NKT Photonics) and Nilfisk.

NKT explained that the merger of ABB's cable business with its own gives the company a strong growth position in both the offshore wind industry and interconnector market in Europe.

During its investigation of the acquisition, the EC looked at the effects on competition of the removal of one competitor, and whether the transaction would make it more likely that the remaining players could co-ordinate their competitive behaviour.

This assessment was important given the history of collusion in the industry. In 2014 the Commission found that the main producers of high voltage power cables, including NKT and ABB, were involved in a cartel aimed at restricting competition for high voltage underground and submarine power cable projects. The producers had agreed on market and customer allocation. The cartel included Japanese and Korean producers refraining from competing for projects in the European Economic Area, thus staying out of the European companies' home territory.

The Commission's investigation focussed on the parties' overlapping activities for high voltage power cables, in particular, on AC submarine power cables and DC submarine power cables. These cables are used to connect transmission grids separated by water and to bring onshore the energy generated by wind farms at sea. NKT is a potential entrant in the market for DC submarine power cables.

Based on the results of its extensive market investigation, the Commission found that the proposed acquisition would not result in a significant reduction in competition and that a number of strong competitors will remain post-transaction. Significantly, the Commission's investigation revealed the recent and successful entry of competitors from Asia, such as LS Cables and Sumitomo. These companies are now helping to drive and ensure competition in the high voltage cable and power cable accessories markets.

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EC clears NKT's acquisition of ABB's cable business

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