Wax under investigation

The EC has opened an investigation into the planned creation of a joint venture between Sasol Wax International and Total.

The European Commission has opened a detailed investigation into the planned creation of a joint venture between German company Sasol Wax International and the French company Total.

The proposed JV would be active in the production, marketing and sale of petroleum wax products and bitumen additives and would combine Sasol’s and Total’s activities in this area.

The Commission’s initial investigation has found that the proposed transaction could create significant competition concerns given the strong overlap between the two companies’ paraffin waxes and micro waxes activities.

The Commission now has approximately four months to take a final decision on whether the new JV would significantly impede effective competition within the Single Market.

“This joint venture will be by far the largest player on these markets in Europe”, commented Competition Commissioner Neelie Kroes. “It is therefore crucial that the Commission carefully analyses the available information to guard against any significant impediment to effective competition on these wax markets to the detriment of customers.”

Among petroleum based waxes, slack wax and bright stock slack wax are produced in refineries as by-products of the oil refining process. They may be used captively, sold directly to the construction board industry or further refined into paraffin waxes or micro waxes. The latter products are used as an important input in many different industries, including candle manufacturing, rubber, packaging, cable, chewing gum and adhesives.

Sasol is already the clear market leader for paraffin waxes in the European Economic Area (EEA) and the creation of the joint venture, which would integrate Total’s wax activities with those of Sasol, would strengthen this position significantly. Total would also supply the joint venture with slack wax.

The Commission’s investigation have shown that the European markets for paraffin waxes and micro waxes are capacity constrained, and that such constraints may increase through the transaction.