The ACCC has discontinued its review of the proposed merger between global container handling equipment companies Cargotec and Konecranes.
Cargotec and Konecranes abandoned the transaction on 29 March 2022 after the UK Competition and Markets Authority (CMA) blocked the merger, and the US Department of Justice (DOJ) informed the parties that it intended to sue.
The ACCC started its review on 5 August 2021 and released a statement of issues in October 2021 outlining its preliminary competition concerns, including the reduction of straddle and shuttle carrier suppliers in Australia from two to one, and gantry cranes suppliers from three to two.
In February 2022, the ACCC commenced public consultation on Cargotec and Konecranes’ proposed divestiture remedy in which both parties undertook to divest a range of assets globally to address the concerns of the ACCC and international competition regulators.
“While we had not come to a final conclusion, Australian customers expressed strong concerns that the proposed divestiture remedy may not have been sufficient to address the competition issues the merger might cause,” ACCC Chair Gina Cass-Gottlieb said.
“The identity of the prospective buyer for the divested Cargotec and Konecranes business units was not known, and it was unclear whether the prospective buyer would have the intention and ability to be an effective, long-term competitor to the merged firm.”
“This is particularly important because container handling equipment is a critical part of Australian supply chains, which are already under severe stress due to the COVID-19 pandemic. Any adverse impact on competition has the potential to cause significant damage to various parts of the Australian economy,” Ms Cass-Gottlieb said.
“It was also unclear that the proposed divestiture remedy, made up of mix and match assets from both companies, included all the critical assets, personnel and technology essential for the divested businesses to function successfully and compete with a combined Cargotec-Konecranes.”
The ACCC acknowledges the collaboration with international competition regulators during this review, including the CMA, DOJ, European Commission and New Zealand Commerce Commission.
More information is available on the ACCC website here: Cargotec Corporation – Konecranes Plc
Note
A ‘mix and match’ divestiture remedy refers to an arrangement where both merger parties divest parts of their businesses to ensure the overall transaction does not result in a substantial lessening of competition in any market.
Background
Cargotec is a Finnish publicly listed supplier of material handling solutions, ranging from container handling equipment and services to engineering solutions for the maritime industry.
In Australia, Cargotec’s Kalmar business supplies container handling equipment and services, including aftersales servicing and spare parts. Cargotec’s Inver Port Services business provides maintenance and specialised engineering services to the stevedoring industry.
Cargotec’s Bromma division supplies spreaders for use in container handling equipment. A spreader is the piece of equipment that grips the container.
Konecranes is a Finnish publicly listed supplier of material handling solutions, ranging from container handling equipment and services to solutions for the general manufacturing and processing industries.
In Australia, Konecranes’ Port Solutions business is involved in the sale of container handling equipment and terminal solutions. This includes Konecranes’ brands such as Noell (acquired as part of Konecranes’ acquisition of Terex’s Material Handling and Port Solutions business) for automated and manual straddle and shuttle carriers.
Konecranes’ mobile equipment is primarily supplied to customers by its distributor United Equipment.
A number of overseas competition regulators have considered the proposed merger between Cargotec and Konecranes. They include the Competition and Markets Authority (UK), Department of Justice (USA), European Commission, Israel Competition Authority, and New Zealand Competition Commission.
