Agrofert is allowed to acquire Unipetrol

The Office for the Protection of Competition (hereinafter as “the Office”) in its decision of 4 September 2002 conditionally approved the concentration of Agrofert Holding and Unipetrol.

“Three commitments stated in the decision were determined in favour of maintaining and development of effective competition” commented the Chairman of the Office, Mr. Josef Bednar. The Office reacted on objections against the concentration submitted by the undertaking Agropol Group with respect to the market of nitrogen fertilizers and it achieved the adoption of these commitments by Agrofert during the proceeding.

Agrofert Holding undertakes not to restrict without justifiable reason the supply of industrial fertilizers and of means for the plants protection for distribution companies outside the Agrofert Group for five years, and to execute the supply at least in the amount, which is currently purchased from the Agrofert group, not only during the autumn, but year round.

Furthermore, Agrofert Holding undertakes to trade with industrial fertilizers and with means for the plants protection at standard conditions, so as neither distributor nor customer is discriminate in the amount, quality or price.

The third commitment states that Agrofert Holding undertakes to maintain equal pricing conditions for the purchase of nitrogen fertilizers for all distribution companies outside the Agrofert Group (as well for members of the Group) for five years, and at the same time to make public quarterly presumed price development of nitrogen fertilizers in the transparent way, including the determination of conditions for increase of prices in consequence of rise of additional costs.

Agrofert Holding and Unipetrol are neither actual nor potential competitors in prevalent part of their activities, and the concentration can be characterized as a concentration with conglomerate nature. “There is no overlap in prevalent and decisive part of product’s portfolios. Conglomerate mergers, unlike to some horizontal and vertical mergers, do not generally raise serious doubts from the distortion of competition,” commented the Chairman of the Office, Mr. Josef Bednar.

The European Commission has approved every case of conglomerate merger. Partial horizontal overlap of activities of merging undertakings on some product markets was found as not important strengthening of resulting market share, which could not lead to strengthening of position of a new entity on the market. The same situation will result also in case of nitrogen fertilizers, when Agrofert Holding will be exposed to competition from economic strong subjects. These subjects did not raise any objection with respect to the merger. The fulfillment of company’s commitments will contribute to maintaining of competition in petrochemical and refinery industry.

The concentration will lead, in consequence of connection of domestic refinery and petrochemical holding with a group covering by its activities agriculture sector, provision trade and chemistry, to increase of economic and financial power of Agrofert Group. “With respect to prevalent conglomerate nature of concentration, specific nature of chemical production, which is characteristic by strong vertical relations between particular producers, and with respect to the fact that in case of companies Agrobohemie, Lovochemie and Aliachem, in consequence of the concentration the change of quality of control is found, however, the significant distortion of competition will not occur. The commitments accepted by the party to the proceeding are also sufficient for the elimination of possible distortion of competition on determined relevant markets. Furthermore, the Office states that the above quoted commitments correspond with restrictions proposed by the undertaking Agropol Group,” added the Chairman of the Office, Mr. Josef  Bednar.

Press and Information Department