EU Commission Approves Acquisition of Solutia by Eastman

BRUSSELS -- The European Commission has cleared under the EU Merger Regulation, the proposed acquisition of Solutia Inc. by Eastman Chemical Company, both US-based chemical companies. The Commissions investigation concluded that the transaction would not raise competition concerns because the parties are not active on the same markets and will continue to face sufficient competition.

The Commissions investigation examined the competitive effects arising from the vertical relationship between Eastmans upstream supply of 2-ethylhexanoic Acid ("2-EHA") and Solutias downstream supply of plasticizers for use in polyvinyl butyral ("PVB") sheet.

The Commission found that post transaction, the merged entity would continue to face competition from a number of strong competitors upstream; that 2-EHA producers would continue to have a range of alternative customers inside and outside the European Economic Area (EEA)1; and that the merger would not result in any substantial change in the markets concerned since Solutia is not currently a customer of Eastman in the EEA.

The transaction was notified to the Commission in mid April.

Merger Control Rules and Procedures

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II).

About Eastman

Eastman manufactures the chemicals, fibers and plastics that give everyday products the strength, design and functional characteristics desired by consumers and commercial customers worldwide.

About Solutia

Solutia manufactures performance materials and specialty chemicals used in consumer and industrial applications.

About EU

The EU is a unique economic and political partnership between 27 European countries that together cover much of the continent. It was created in the aftermath of the Second World War. The first steps were to foster economic cooperation: the idea being that countries who trade with one another become economically interdependent and so more likely to avoid conflict. Since then, the EU has developed into a huge single market with the euro as its common currency. What began as a purely economic union has evolved into an organization spanning all policy areas, from development aid to environment.