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Blocked Cargotec-Konecranes merger risked hiking prices, says UK competition watchdog

Competition and Markets Authority
The Competition and Markets Authority blockded a Konecranes and Cargotec merger announced in 2020. Photo: Markku Ulander/Lehtikuva/AFP via Getty (MARKKU ULANDER via Getty Images)

Britain's Competition and Markets Authority (CMA) has blocked a planned merger between two Finnish cargo companies over "substantial" competition concerns.

Cargotec (CGCBV.HE) and Konecranes (KCR.HE) agreed to merge in October 2020.

The two companies had planned to create a company that would offer a full slate of services from the supply of warehouse forklifts to cranes that move containers onto lorries and ships.

The CMA said the companies competed "closely for business", and that customers would have few alternative suppliers after the merger.

It added that an in-depth investigation found the €4.5bn (£3.42bn/$5bn) merger would harm competition in the supply of many container handling products.

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"This loss of competition could have serious consequences for UK port terminals and other customers, including higher prices and lower quality products and services across a wide range of container handling products," the watchdog said.

The Finnish cargo handling equipment specialists said they had abandoned the merger and the related processes and will continue to operate separately following the regulator's decision.

Read more: CMA warns Morrisons takeover could push up fuel prices 121 locations

Martin Coleman, chair of the CMA inquiry group, said: "Container handling equipment is key to the smooth running of UK ports, and events in recent years have shown us how quickly problems in the supply chain can cause problems for UK consumers and businesses.

"The solutions put forward by Cargotec and Konecranes failed to effectively address our concerns, which is why we were left with no choice but to block this merger in order to ensure that UK consumers and businesses are not worse off as a result of the deal."

The competition watchdog's move comes one month after the EU gave the deal conditional antitrust approval after the two Finnish businesses in January offered to sell assets to address competition fears.

By the end of 2021, Cargotec had booked $63m of merger-related transaction and integration planning costs and Konecranes booked $62m.

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