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Cornish china clay merger to remain intact

Simon Polito

Competition Commission introduces five-year price-control measures for performance-mineral customers

THE Competition Commission (CC) has introduced a five-year price control on the supply of kaolin to UK performance-mineral (paints and adhesives) customers in a move which will leave the completed merger between Imerys Minerals Ltd and Goonvean Ltd in one piece.

In its final report, the CC concluded that the merger could lead to a loss of competition and higher prices for some of the merged parties’ customers. In particular, the two parties supply more than 90% of the kaolin used by UK customers in the performance-mineral applications market.


However, this is only one of a number of markets supplied by the parties and given that other ways of addressing the CC’s concerns would be impractical or disproportionate, the Commission has decided to introduce a five-year price control to protect these customers from the loss of competition.

The price control, which will comprise a price cap until the end of 2015 followed by an RPI –0.5% price cap for 2016–2018, means that the merged company will not be required to sell any of its operations.

The CC did not find a substantial lessening of competition in the other product markets, eg kaolin for paper products, sanitaryware, tableware, pharmaceuticals or by-products from the extraction process, thus confirming its provisional findings which were published in July. Tableware applications have since been removed as an area of concern following evidence that Goonvean's remaining deposits for this purpose are limited.

The CC also published a notice of possible remedies in July, which set out options for addressing the loss of competition, including whether a partial sell-off of the Goonvean business or behavioural measures to protect customers from price rises or product withdrawal could be alternatives to a full reversal of the acquisition.

Simon Polito (pictured), deputy chairman of the Competition Commission and chairman of the Imerys/Goonvean Inquiry Group, said: ‘We looked at other options carefully before deciding that the unusual circumstances of this case meant a price control for this specific market would be the most appropriate way to protect customer interests.

‘We are conscious that we found a problem with only one of the markets supplied by the merged businesses so a full divestiture would be disproportionate. There would also be practical difficulties with tailoring a partial divestiture to cover the supply of kaolin for performance-mineral applications.

‘As the only two significant suppliers of this product to UK customers, we have needed to take action to prevent this merger leading to higher prices and clearly a price cap will achieve that.’


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