CCP greenlights Lotte Chemical Pakistan’s stake acquisition in Engro Polymer & Chemicals

Pakistan's Competition Commission of Pakistan (CCP) has given the green light for Lotte Chemical Pakistan Limited (LCPL) to acquire a stake in Engro Polymer & Chemicals Limited (EPCL), following a Phase-I competition assessment under the Competition Act of 2010, according to a statement released on Tuesday. LCPL is a public corporation that manufactures and distributes Purified Terephthalic Acid (PTA) in Pakistan, a key raw material used in the production of polyester and polyethylene terephthalate (PET).

On the other hand, EPCL is a company that manufactures and supplies Polyvinyl Chloride (PVC), caustic soda, hydrogen peroxide, and other chlor-alkali products. In March, Lotte Chemical Pakistan Limited expressed its intention to acquire shares and control of EPCL. The CCP determined that LCPL does not operate in any of the relevant product markets, such as PVC, caustic soda, and hydrogen peroxide, in Pakistan, which are the areas that were evaluated for competition assessment.

Moreover, neither LCPL nor its associated companies buy products from EPCL. Consequently, the proposed transaction does not create any overlap between the merging parties, whether horizontal or vertical. In the PVC market, EPCL is the exclusive domestic producer, with imported goods serving as substantial competition. In the caustic soda and hydrogen peroxide markets, EPCL holds a lower market share and competes with other participants.

The CCP also observed that the proposed acquisition does not change the ownership and control of EPCL, which does not increase its production capacity, sales, or output. Therefore, the transaction is not anticipated to increase market concentration, erect barriers to entry, or enhance the market power of either entity. Based on the Phase-I assessment, the regulator concluded that the proposed transaction is unlikely to significantly reduce competition or create or reinforce a dominant position in any of the relevant markets. The transaction has been authorized under Section 31(1)(d)(i) of the Competition Act of 2010.