European Commission probes Mondi's proposed deal with Walki

Thursday, Sep 03, 2015

The European Commission has launched an in-depth investigation into Mondi's proposed acquisition of two industrial packaging plants from Walki in a bid to ensure that the deal is pursuant to the EU Merger Regulation.

The regulator is concerned that the deal may reduce competition, as a result of which the customers will witness high wrapping material prices.

The wrapping materials act as moisture barriers and they are used in the paper industry or in boxes for packaging fresh food products.

Commissioner Margrethe Vestager said: "The proposed merger could remove a key competitor for several types of packaging material.

"These are used in everyday items such as food packaging. I am concerned that the merger would lead to higher prices and less choice for these companies' clients and that the price increases could ultimately be passed on to consumers."

Earlier this year, integrated packaging and paper manufacturer Mondi agreed to acquire two extrusion coating facilities from Walki Group for €60m.

Extrusion coating is a technique that results in a strong and moisture resistant foil with several applications such as paper packaging, envelopes, food wrapping and bags, timber wrapping, and insulation materials for construction.

During an initial investigation, the Commission found that the deal may remove a major competitive constraint on Mondi.

As a result, other competitors will have lower production capacity, when compared to the merged entity and this situation will lead to reduction of choice for customers and potential price increases for the packaging material products.

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