Vertical copper merger goes ahead on appeal

Genesis was retained by the parties to a vertical merger after the Competition Commission prohibited the acquisition of an additional 50% shareholding in Maksal by Sunset Bay, which already owned 48.5% of the company.

Maksal is a manufacturer of various copper products, while Sunset Bay is a wholesale distributor of copper, brass and other non-ferrous metal products.

The commission’s prohibition stemmed from its view that the transaction would substantially lessen or prevent competition in the market for the distribution of extruded copper bushbar and solid copper extrusions.

Its concerns were threefold: firstly, that Maksal was an actual or potential competitor to Sunset Bay in the downstream market for distribution; secondly, that existing or potential competitors reliant on Maksal’s products were at risk of foreclosure; and, thirdly, that the risk of coordination in the relevant market would be enhanced as a result of the transaction.

Genesis filed a report on behalf of the merging parties in their application to have the commission’s prohibition overturned by the Competition Tribunal.

The report demonstrated that Maksal and Sunset Bay were not, in fact, direct competitors in the relevant market and, given Maksal’s very limited supply to third-party distributors, that there were no foreclosure concerns. It also showed that no specific reasoning had been given to indicate why the merger itself would enhance coordination in the relevant market.

The tribunal ultimately approved the merger with conditions.