Ecolab must sell off Holchem, rules CMA

8th of October 2019
Ecolab must sell off Holchem, rules CMA

The Competition and Markets Authority (CMA) in the UK has decided Ecolab must sell off Holchem to prevent potential price rises or a lower quality of service as a result of their merger.

The decision follows an in-depth Phase 2 investigation by the government organisation, which concluded the merged organisation is likely to face limited competition from other suppliers.

Ecolab and Holchem, who completed their merger in November 2018, are two of the largest suppliers of cleaning chemicals to food and drink manufacturers in the UK. The merger will create a new organisation which is much larger than any of its remaining competitors and would leave only three players of any significant size competing in the UK market.

This merger reduces the choice available to these customers and the CMA is concerned this could mean food and drink manufacturers face higher prices or a lower quality of service for cleaning chemicals.

While the group of independent CMA panel members considered alternative ways of addressing its concerns about the merger, it has concluded the only effective way of addressing the significant loss of competition is to effectively block the merger. Now, Ecolab must sell off Holchem to a new owner, which must be approved by the CMA.

Kirstin Baker, the inquiry chair said: "We have carried out a thorough investigation analysing a large amount of data from the companies as well as evidence collected from both customers and competitors. We concluded these two companies compete closely and this deal could have very serious effects - prices could go up or quality standards in crucial support services could get worse.

"Having carefully considered how these issues could be resolved, we decided that only blocking the merger and requiring Ecolab to sell Holchem would address our concerns."

Further details about the case can be found at this dedicated webpage.

 

 

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