The Competition Commission of Pakistan (CCP) has approved the proposed acquisition of a shareholding in Engro Polymer & Chemicals Limited (EPCL) by Lotte Chemical Pakistan Limited (LCPL) from Engro Corporation Limited, following a Phase-I competition assessment under the Competition Act, 2010, read a statement on Tuesday.
LCPL is a public limited company engaged in the manufacture and supply of Purified Terephthalic Acid (PTA) in Pakistan. PTA is primarily used as a raw material in the production of polyester and polyethylene terephthalate (PET). EPCL, the target company, manufactures and supplies Polyvinyl Chloride (PVC), caustic soda, hydrogen peroxide and other chlor-alkali products.
Back in March, Lotte Chemical Pakistan Limited announced its intention to acquire shares and control of EPCL.
For its competition assessment, CCP identified PVC, caustic soda and hydrogen peroxide as the relevant product markets, with Pakistan constituting the relevant geographic market.
The assessment found that LCPL does not operate in any of the identified relevant markets.
Furthermore, neither LCPL nor any of its associated, affiliated or group companies purchases products from EPCL, read the statement. The proposed transaction therefore gives rise to neither a horizontal nor a vertical overlap between the merging parties.
In the PVC market, EPCL is the sole domestic manufacturer, while imports provide an important competitive constraint. In the markets for caustic soda and hydrogen peroxide, EPCL holds comparatively lower market shares and competes with other market participants.
CCP further observed that the proposed acquisition entails a change in the ownership and control of EPCL without, in itself, increasing the target company’s production capacity, sales or output. The transaction is therefore not expected to increase market concentration, create barriers to entry or materially enhance the market power of either party.
Based on its Phase-I assessment, the regulator concluded that the proposed transaction is unlikely to substantially lessen competition or create or strengthen a dominant position in any of the relevant markets. The transaction has accordingly been authorised under Section 31(1)(d)(i) of the Competition Act, 2010.