The European steel industry received a definitive verdict on a major proposed merger that was blocked over five years ago. On Friday, the European Court of Justice ruled that the European Commission's 2019 decision to prohibit the merger between German steelmaker thyssenkrupp and Tata Steel Europe was legally sound. This ruling upholds a previous judgment by the General Court of the European Union from June 2022, effectively ending thyssenkrupp's legal challenge against the merger ban.
The proposed joint venture between thyssenkrupp and Tata Steel Europe, which would have created Europe's second-largest steelmaker, was abandoned by the companies in May 2019 due to strong opposition from EU competition regulators. The European Commission had expressed concerns that the merger would significantly reduce competition in the European steel market, particularly for automotive steel and packaging steel products. thyssenkrupp, believing the Commission's reasoning was flawed, subsequently filed a lawsuit to annul the decision.
In its ruling, the ECJ dismissed thyssenkrupp's arguments and affirmed that the Commission's assessment of the merger's potential anti-competitive effects was correct. The court found that the Commission had properly analyzed the relevant product and geographic markets, as well as the likely impact on prices and consumer choice. This decision underscores the EU's commitment to maintaining competitive markets and preventing undue concentration in key industrial sectors.
thyssenkrupp, while expressing disappointment with the outcome, stated that it would carefully evaluate the court's reasoning. A company spokesperson said, "We have taken note of this and we will evaluate the reasoning behind the ruling." The German industrial conglomerate maintained its view that the original concerns about competition impairment were unfounded. However, thyssenkrupp has since moved on to explore other strategic options for its steel business.
In the years following the failed Tata merger, thyssenkrupp has pursued alternative partnerships to strengthen its position in the challenging steel market. Most notably, the company has entered into discussions with Czech billionaire Daniel Kretinsky's energy holding company, EP Corporate Group. In July 2023, EPCG acquired a 20% stake in thyssenkrupp's steel business. The two companies are now in talks about EPCG potentially increasing its ownership to 50%, creating an equal joint venture.
The ECJ's ruling serves as a reminder of the complex regulatory landscape that major industrial mergers must navigate in the European Union. It highlights the Commission's power to intervene in deals that it believes could harm competition, even when the companies involved are facing significant market pressures. The steel industry, in particular, has been grappling with overcapacity, rising energy costs, and the need for substantial investments to meet climate targets.
For thyssenkrupp, the court's decision marks the definitive end of a chapter in its corporate history. While the company has expressed its continued disagreement with the Commission's original assessment, it has pragmatically shifted its focus to new partnerships and strategies. The ongoing talks with EPCG reflect Thyssenkrupp's efforts to adapt to changing market conditions and regulatory realities in the European steel sector.
As the dust settles on this long-running legal battle, the broader implications for EU merger control and industrial policy remain a subject of debate. Some industry observers argue that stricter merger controls may hinder European companies' ability to compete globally, while others maintain that preserving competition within the EU market is crucial for innovation and consumer welfare. The thyssenkrupp-Tata case will likely be studied for years to come as a significant precedent in European competition law.
