EU: Antitrust Review for Fincantieri-Chantiers de l'Atlantique Deal
On Wednesday, the European Commission confirmed media reports of a pending antitrust review of Italian shipbuilder Fincantieri's plan to buy a French competitor, the cruise and naval shipyard Chantiers de l'Atlantique (formerly STX France). The day earlier, Fincantieri described the reports as hearsay: in a statement, the firm said that it "strongly disapproves of such rumors, which have also negatively affected its share price."
“Demand for cruise ships is booming globally. Chantiers de l'Atlantique and Fincantieri are two global leaders in this sector. This is why we will carefully assess whether the proposed transaction would negatively affect competition in the construction of cruise ships to the detriment of the millions of Europeans taking cruise holidays every year," said European Commissioner for Competition Margrethe Vestager in a statement.
Fincantieri is Europe's largest shipbuilder, and it is the world's leading builder of cruise ships - a complex vessel class that requires extensive supplier relationships and experience to construct successfully. In justifying its in-depth review, the Commission cited high market demand for cruise ships, the limited number of full-size cruise ship builders (there are four, all in Europe), and the high barriers to entry for new competitors. At least two world-class shipyards which have attempted to branch out into the large cruise ship sector have canceled or delayed their projects.
"The Commission has preliminarily concluded that it is unlikely that a timely and credible entry from other shipbuilders would counteract the possible negative effects of the transaction. The transaction may therefore significantly reduce competition in the market for cruise shipbuilding, which could lead to higher prices, less choice and reduced incentives to innovate," the agency said in its statement.
In its statement Tuesday, Fincantieri expressed its "firm disapproval" of an EC decision to conduct an in-depth antitrust investigation.