Accuride’s acquisition of Mefro Wheels gains conditional approval
Consolidation within Europe’s commercial vehicle steel wheel market is coming, but three will remain the magic number when it comes to suppliers. Some ten months after the proposed deal was first announced, the European Commission has granted its conditional blessing for Accuride Corporation to acquire steel wheel manufacturer Mefro Wheels GmbH.
The prerequisite for approval is that Accuride first divests its majority share in Gianetti Ruote S.r.l., the Italian company through which it supplies steel wheels for trucks, buses and trailers to customers in the European Economic Area (EEA). The European Commission believes a separation of Accuride and Gianetti Ruote would prevent customer choice from being compromised.
In its assessment of the transaction announced in June 2017 and its expected impact upon competition within the EEA market for truck and bus steel wheels, the European Commission determined that Accuride and Mefro Wheels would possess a combined market share of more than 60 per cent. Should this original transaction have been approved, only Maxion Wheels would have remained in the market to compete with the merged entity and the number of commercial steel wheel suppliers in the EEA would decrease to just two. With the choice of suppliers available to customers “significantly limited” in this way, the Commission foresaw limitations upon customers’ ability to resist price increases.
A second factor deterring the European Commission from approving the deal in its original form was its conclusion that suppliers who aren’t currently present in Europe “do not exert sufficient competitive constraint and are not expected to become a significant competitive force in the near future.”
To address the European Commission’s concerns, Accuride offered to divest its Gianetti Ruote business to a suitable buyer. The Commission welcomed this proposed remedy as it “maintains the competitive landscape existing before the transaction,” namely the presence of three independent truck and bus steel wheel suppliers.
While the proposed sale of Gianetti Ruote allays concerns regarding competition, the European Commission stresses that approval is “conditional upon full compliance with the commitments.”