Mergers: Commission approves proposed acquisition of TK Aluminum "A" by Nemak

The European Commission has approved under the EU Merger Regulation the proposed acquisition of certain subsidiaries of Teksid Aluminum of Bermuda by Nemak of Mexico. The Commission concluded that the proposed transaction would not significantly impede competition in the European Economic Area (EEA) or any substantial part of it.
The purchaser Nemak, controlled by Alfa S.A.B. de C.V. is active internationally in the production of aluminium castings for the automotive industry. The target, TK Aluminum "A", is a carve-out of several production facilities of Teksid Aluminum which produces castings for the automotive industry. In Europe, the only plant subject to the acquisition is located in Poland.

Within the EEA, TK Aluminum "A" supplies only aluminium cylinder heads and other automotive components, whereas Nemak produces aluminium cylinder heads and engine blocks.

The Commission's market test confirmed the findings of its recent decision in the same sector that, given the current supply practice of car manufacturers, both the market for cylinder heads and the market for engine blocks are European-wide in scope.

The Commission's analysis also showed that the merged entity would not have market power to allow it to raise prices profitably. Car manufacturers often produce cylinder heads themselves, and can and do switch production of cylinder heads from external suppliers to internal suppliers. Therefore, independent cylinder head suppliers are subject to extensive competitive pressure from the car manufacturers' in-house production. The Commission's market investigation also revealed that sufficient production capacity is available on the market: capacity is even expected to increase in the foreseeable future due to the plans of certain market players to expand their capacity.