The Competition Commission of Pakistan (CCP) has approved Lotte Chemical Pakistan Limited’s (PSX: LOTCHEM) proposed acquisition of a stake in Engro Polymer & Chemicals Limited (PSX: EPCL) from Engro Corporation Limited (PSX: ENGRO).
The commission announced on October 20 that its Phase-I assessment under the Competition Act, 2010, found the proposed deal unlikely to substantially reduce competition or create or strengthen a dominant market position.
Lotte Chemical Pakistan manufactures and supplies purified terephthalic acid (PTA), a raw material used primarily to produce polyester and polyethylene terephthalate (PET).
Engro Polymer manufactures polyvinyl chloride (PVC), caustic soda, hydrogen peroxide and other chlor-alkali products.
The commission assessed the transaction across three product markets: PVC, caustic soda and hydrogen peroxide, treating Pakistan as the relevant geographic market.
Its review found that Lotte Chemical Pakistan does not operate in any of these markets. The Commission also found that neither Lotte Chemical Pakistan nor its associated, affiliated, or group companies purchase products from Engro Polymer.
PVC Imports
Engro Polymer is Pakistan’s only domestic manufacturer of PVC, according to the CCP assessment. However, imports provide an important source of competition in the market.
In the caustic soda and hydrogen peroxide markets, Engro Polymer has comparatively smaller market shares and faces competition from other participants.
The commission concluded that the transaction would change Engro Polymer’s ownership and control but would not, by itself, increase the company’s production capacity, sales or output.
The Commission authorized the transaction under Section 31(1)(d)(i) of the Competition Act, 2010. The approval allows the proposed ownership change to proceed from the competition-law perspective.
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