The European Commission has launched a probe into the proposed purchase of UK-based can manufacturer Rexam by the US firm Ball Corporation, to ascertain whether it conforms to the EU Merger Regulation.
The investigation is born out of concerns over the possibility of the deal weakening competition in the beverage can and aluminum bottle sectors in the European Economic Area (EEA), as Ball and Rexam are the top two can makers in the region.
Ball manufactures metal packaging for beverage, food and household products with units in North America, Brazil, Europe and the Asia Pacific, while Rexam has can making facilities in North America, South America, Europe, Africa, the Middle East and Asia.
A £4.4bn offer was made by Ball in February to acquire Rexam, and formed a wholly-owned subsidiary Bidco for the transaction.
If the deal gets through, the duo will have not only their combined market shares high but also own around two-thirds of the manufacturing units in Europe.
European Commission commissioner Margrethe Vestager said: "Very many of us buy drinks in cans - they are convenient and used everywhere. It is therefore very important that the commission makes sure that Ball's takeover of Rexam does not restrict effective competition and so risk price increases that could be passed on to consumers".
The commission has 90 working days to probe into the deal, before it makes its decision in November.
The European Commission said in a statement: "The commission's concerns relate to the supply of beverage cans and aluminium bottles throughout the EEA.
"After its initial investigation the commission considers that the remaining competitors would not pose a sufficient competitive constraint on the merged entity. The investigation also suggests that the ability to compete effectively requires both a certain minimum size and a widespread network of production facilities." .
