The marriage between crane companies Cargotec and Konecranes has been called off after the UK Competition & Markets Authority blocked the merger while the U.S. Department of Justice threatened to sue.
According to the UK CMA, the two companies offer a range of container handling equipment and services to port terminals and other industrial customers. They announced their proposed $5 billion nuptials in October 2020.
Alas, the path to true love never does run smooth. The UK CMA announced its objection to the wedding in late March this year after it concluded that the merger would harm competition in the supply of a wide range of container handling products.
“This loss of competition could have serious consequences for UK port terminals and other customers, including higher prices and lower quality products and services,” the UK CMA ruled.
The would-be partners offered to carve up their assets to allow the merger to go ahead but, still, the CMA was unmoved. Noting that Cargotec and Konecranes declined to consider other, alternative remedies, the CMA concluded that only a prohibition on the merger would suffice.
Meanwhile, on the other side of The Pond, the U.S. Department of Justice was distinctly unimpressed by the prospect of a merger.
The Justice Department told the merger parties that their proposal was not sufficient to address concerns that important competition in four types of shipping container handling equipment would be eliminated. The D.o.J. came to the view that the proposed merger would harm competition especially as the companies wanted to accomplish the merger by retaining the strongest parts of both businesses.
Attorney General Merrick B Garland spoke bluntly. “The Justice Department’s Antitrust Division will vigorously investigate potential violations of our antitrust laws, no matter the industry, no matter the company, and no matter the individual,” said Attorney General Merrick B. Garland. “The proposed merger of these two shipping equipment giants would have harmed American consumers. It threatened the global supply chain and the free and fair markets upon which the integrity of our economy depends”.
The US Department of Justice thanked its partners, including the Australian Competition and Consumer Commission, the European Commission, and the United Kingdom’s Competition and Markets Authority.
After the news from overseas, the ACCC announced that it had discontinued its review of the proposed merger.
“While we had not come to a final conclusion, Australian customers expressed strong concerns that the proposed divestiture remedy may not have been sufficient to address the competition issues the merger might cause,” ACCC Chair Gina Cass-Gottlieb said.
“The identity of the prospective buyer for the divested Cargotec and Konecranes business units was not known, and it was unclear whether the prospective buyer would have the intention and ability to be an effective, long-term competitor to the merged firm.”
Both Konecranes and Cargotec expressed disappointment at the decisions of the competition regulators.
