TECHINT-SIDERCA/DALMINE
PRESS RELEASE
The Italian Competition Authority has decided to authorize the acquisition of Dalmine's shares held by Iri (84.08%) by Techint Finanziaria and Siderca (Techint Group). In as such, this merger does not create or strengthen a dominant position on the markets involved so as to reduce or eliminate competition substantially and on a lasting basis.
The merger will have its effects in the market for seamless tube mills (in particular line pipes and heat bearing pipes) whose dimension is EEC-wide. Table 1 shows, with regards to the national and community territories, the market shares which will be held by the new entity. It is to be noted that in Italy, the acquisition of Dalmine by the Techint Group will not enhance at all its position in the Oil Country Tubular Goods (OCTG) market, while the merger will enhance slightly its shares in the markets for line pipes (+ 1.58%) and heat bearing pipes (+ 0.44%). Within the European Union, as a result of the merger, the shares currently held by Dalmine will increase in the OCTG market by 1.17%, in the segment of the line pipes by 4.5% and in the segment of heat bearing pipes by 1.1%. It emerges, in particular, that the new entity will hold a position of relative dominance in the community market of line pipes, with a share of 40.5%. However, this situation originates from a pre-existing leadership position of Dalmine, which derives from the fact that the MPM technology used exclusively by Dalmine, since 1978, is especially indicated for the production of seamless oil pipes of medium range.
Table 1
| New entity's market shares | Italy | EU |
| OCTG | 89.3% | 26.2% |
| Line pipes | 60.0% | 40.5% |
| heat bearing pipes | 53.2% | 23.3% |
Source: Techint Group data elaboration
The structural changes deriving from the merger do not create or strengthen a dominant position as a result of which competition would be significantly impeded in the common market. The Authority has come to this conclusion considering the presence in the European Union market of numerous and qualified manufacturers who work already in the relevant market of the seamless tube mills. Vallourec currently holds control about 30% of the common market in the OCTG segment, which is characterized by the presence of two operators, Mannesmann and Dalmine, whose shares are about 25% each. In the segment of the line pipes, Dalmine's leadership is contended both by Mannesmann, with a common market share over 30%, and by numerous smaller competitors (Vallourec, British Steel, Tubos Reunidos). In the segment of heat bearing pipes, Mannesmann holds a prominent position in the common market with a share of over 40%, which is counterbalanced by the presence of many smaller producers and Dalmine and Vallourec. This contestability also derives in part from the fact that certain kinds of seamless tube mills need fewer
and less strict quality controls (especially with regards to the so-called smooth tubes for carpentry). A further element, which seems to exclude that this merger can violate the Competition Act, is found in the ever-increasing competition exerted on the manufacturers operating in the common market by importers of seamless tube mills from other areas of the world (in particular from the Eastern European countries, Russia and China). These importers are expected to increase in the future their ability to compete in the relevant markets.