ISLAMABAD: The Competition Commission of Pakistan (CCP) has approved the proposed acquisition of a shareholding in Engro Polymer & Chemicals Limited (EPCL) by Lotte Chemical Pakistan Limited (LCPL) from Engro Corporation Limited, following a Phase-I competition assessment under the Competition Act, 2010.
LCPL is a public limited company engaged in the manufacture and supply of Purified Terephthalic Acid (PTA) in Pakistan. PTA is primarily used as a raw material in the production of polyester and polyethylene terephthalate (PET). EPCL, the target company, manufactures and supplies Polyvinyl Chloride (PVC), caustic soda, hydrogen peroxide and other chlor-alkali products.
For its competition assessment, CCP identified PVC, caustic soda and hydrogen peroxide as the relevant product markets, with Pakistan constituting the relevant geographic market.
The assessment found that LCPL does not operate in any of the identified relevant markets. Furthermore, neither LCPL nor any of its associated, affiliated or group companies purchases products from EPCL. The proposed transaction therefore gives rise to neither a horizontal nor a vertical overlap between the merging parties.
In the PVC market, EPCL is the sole domestic manufacturer, while imports provide an important competitive constraint. In the markets for caustic soda and hydrogen peroxide, EPCL holds comparatively lower market shares and competes with other market participants.
CCP further observed that the proposed acquisition entails a change in the ownership and control of EPCL without, in itself, increasing the target company’s production capacity, sales or output. The transaction is therefore not expected to increase market concentration, create barriers to entry or materially enhance the market power of either party.
Based on its Phase-I assessment, the Commission concluded that the proposed transaction is unlikely to substantially lessen competition or create or strengthen a dominant position in any of the relevant markets. The transaction has accordingly been authorized under Section 31(1)(d)(i) of the Competition Act, 2010.
The approval reflects CCP’s commitment to facilitating investment and corporate transactions while ensuring that changes in market ownership and control do not adversely affect competition, market efficiency or consumer welfare.
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