Wilhelmsen plans to acquire Drew Marine could reportedly run aground after it was found that the deal could violate antitrust laws.
What happened?
It has been discovered by the Federal Trade Commission that the $400 million deal would violate antitrust laws by significantly reducing competition in an important market for marine water treatment chemicals and services.
Deal breaker
Marine water treatment chemicals and services are used by tankers, container ships, bulk carriers, cruise ships, and military support vessels to maintain on-board equipment. For example, marine water treatment chemicals prevent corrosion, remove impurities, and enhance the operation of a vessel’s operational systems, such as boiler water and engine cooling water systems.
They also provide technical services, such as on-board technical visits, training, water testing kits, software to log and analyze test results, and sophisticated and reliable global logistics capable of taking orders from global fleets and supplying marine water treatment chemicals and services to ports around the world.
The complaint alleges that customers for these products, owners and operators of global fleets of these vessels, will be harmed by the proposed acquisition.
Inquiry to be conducted
The FTC also authorized staff to seek in federal court a temporary restraining order and a preliminary injunction to prevent the parties from consummating the merger, and to maintain the status quo pending the administrative proceeding.
Wilhelmsen, based in Norway, is the world’s largest supplier of water treatment chemicals and services to global fleets. In April 2017, the company had announced its plan to acquire the Whippany, N.J.-based Drew, which is the second-largest company in the industry.
The FTC said, “The companies are each other’s closest competitors on numerous competitive dimensions that are important to customers, including product scope, quality and consistency; technical service capability; and global distribution footprint.”
They further added, “Head-to-head competition between Wilhelmsen and Drew provides substantial benefits to global fleets in the form of lower prices and better service,” the FTC said, adding that if the merger was consummated, it “would result in a company controlling at least 60 percent of the global marine water treatment chemical and service market. The next closest competitor represents an inferior choice for global fleets, and would control less than 5 percent of the market.”
Wilhelm Wilhelmsen, the parent of Wilhelmsen Maritime, called the complaint “standard procedure in cases where the FTC considers that a proposed transaction will substantially lessen competition.”
In addition, Wilhelm Wilhelmsen said it “disagrees with the FTC’s evaluation and will continue to work towards a positive outcome.”
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: American shipper
