The decision was made after looking at the responses made by the companies to the Statement of Objections, presentations at the oral hearing and the information provided in response to the Commission's request for information dated May 26, 2014.
'Misleading information'
Ahlstrom Corporation, Munksjö Oyj and Munksjö received a Statement of Objections (Article 14.1(a)) in February this year from the European Commission with respect to alleged incorrect or misleading information provided in connection with the merger notification to the European Commission, submitted in 2012.
The business combination of Ahlstrom's Label and Processing business and Munksjö was completed in two phases during 2013.
“The Commission has closed proceedings against Ahlstrom Corporation, Munksjö Oyi, both of Finland, and Munksjö of Sweden, for a suspected infringement of the rules concerning the provision of information to the Commission for merger control purposes,” the European Commission said in a statement.
“The Commission was concerned that the companies provided misleading information to the Commission in the course of a notification of a transaction under the EU Merger Regulation.
“In response to the Statement of Objections sent by the Commission in February (see IP/14/189), the parties have provided contemporaneous evidence explaining the discrepancies between the estimates provided to the Commission and the parties' internal documents.
“The Commission has now received the necessary information and has therefore closed the infringement proceedings.”
Pre-existing internal documents
The Commission took the preliminary view the parties had provided misleading information in the course of the notification under the EU Merger Regulation of a transaction, whereby Ahlstrom and Munksjö transferred its label and processing business to a new company, later renamed Munksjö Oyj.
During the merger investigation it identified significant discrepancies between the companies' market share estimates for abrasive paper backings and its heavy-weight segment as submitted in the merger notification file of October 2012 and the companies' pre-existing internal documents.
Although the Commission had pointed out these discrepancies in the course of the merger review process, the companies did not provide sufficient clarifications at the time.
Valid reasons
In response to the Statement of Objections the companies have now demonstrated they had valid reasons to reassess their internal market estimates shortly before the notification.
They have also provided contemporaneous documents showing they had carried out a market reconstruction exercise for the purposes of the notification and this exercise led them to reconsider the significance of competitors, including a number of Asian players. For this reason, they had corrected their internal market estimates accordingly.
“While the parties should have disclosed this information to the Commission at an early stage, in particular by explaining the asymmetries between their internal documents and the merger notification, the Commission has now received the necessary information and has therefore closed the infringement proceedings,” it said.
“The Commission considers that any discrepancies between the parties' best estimates in a merger notification and the parties’ estimates in their internal documents should always be justified in a timely manner by the parties.”
The Commission opened an in-depth investigation into the proposed creation of company, combining Munksjö and parts of Ahlstrom in December 2012.
The market investigation confirmed the transaction would have brought together the only two manufacturers of heavy weight abrasive paper backings in the European Economic Area (EEA) and the two leading players in the global market with a market share of over 80%.
The Commission therefore made the approval of the transaction conditional upon the divestment of Ahlstrom's abrasive paper backings business located at Osnabrück, Germany.