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Competition authority opposes NCC’s acquisition of Destia

8 Aug 11 The Finnish Competition Authority (FCA) has opposed NCC’s acquisition of the asphalt paving operations Destia, a government-owned company.

The authority has requested that planned corporate merger should be forbidden by the Market Court, a special court for hearing market law, competition and procurement cases.

In March, NCC signed an agreement to acquire the asphalt and paving operations of Destia, which is wholly owned by the Finnish government. The agreement has been subject to review by the FCA, which has now announced that it opposes the transaction. The FCA has requested that the Finnish Market Court prohibit the acquisition.

The Market Court must now make a decision in this matter and issue notification within three months on whether the acquisition is to be approved or prohibited.

“The negative response was unexpected. We must now examine the material together with the other parties involved in the transaction before we decide what the next step will be for us,” said business area president of NCC Roads Göran Landgren.

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FCA said that Destia is the only business in the capital city region with a fixed asphalt station besides NCC Roads and Lemminkäinen. The other contractors depend on bought asphalt mix and therefore on the sellers of the mix, said FCA, and the  merger would have led to a joint dominant position between NCC Roads and Lemminkäinen Infra Oy which would have significantly impeded competition in the asphalt mix market in the capital city area, it said.

“Following the deal, asphalt mix would only have been sold by NCC Roads and Lemminkäinen in the capital city area, which both compete with their asphalt mix customers for the paving contracts of the municipalities and private actors,” said FCA. “As a result of the deal, the sellers of asphalt mix could have either refused to sell the mix at all, or to have retained the prices above the competed level and thus to have harmed the activities of their competitors in the asphalt paving market. This would in turn have led to increased contract prices and hence been detrimental to the interest of the municipalities, housing organizations and other private actors contracting asphalt paving work.”

FCA added that competition problems resulting from a merger may often be eliminated through the imposition of remedies. Making a prohibition proposal remained the only option in this case, as the remedies submitted by the parties to the FCA could not be seen to effectively address the competition concerns resulting from the merger.

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