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by Tiziana Di Giovannandrea 30 October 2019The European Commission has launched an in-depth investigation to evaluate the proposed acquisition of Chantiers de l'Atlantique (new name of Stx) by Fincantieri because the operation could reduce competition and send towards the high prices of cruise ships in the world market.

Margrethe Vestager , Commissioner for Competition, said that "The demand for cruise ships is booming all over the world. Chantiers de l'Atlantique and Fincantieri are two world leaders in this sector. For this reason we will carefully evaluate whether the operation proposal could harm competition in the sector to the detriment of the millions of Europeans who each year choose to spend their cruise holidays ".

The EU Antitrust fears that the proposed operation will eliminate the important competitive force represented by Chantiers de l'Atlantique and that a duopoly in Europe will be created represented by Fincantieri-Stx on the one hand and the other by the Germans Meyer Werft .

The investigation for violation of the competition limits was initiated on French and German reports. In January the French and German Authorities requested the intervention of the Brussels competition authority on the Fincantieri-Stx agreement signed in February 2018. The arrival of the Trieste company, in the Saint Nazaire shipyards, is therefore at stake and in the hands of the European Commission.

The dossier with details of the operation was notified by Fincantieri to the Commission on 25 September last, as required by the EU merger regulation.

Chantiers de l'Atlantique and Fincantieri have decided not to propose remedies with respect to the fears of the European Authority, during the initial investigation, precisely to dispel the preliminary reservations of the Commission.

Brussels now has 90 days to decide on this. We will have to wait until March 17th 2020 to get a decision on the Fincantieri-ex Stx agreement.
According to the EU Authority, due to the highly complex nature of this nautical sector, the emergence of new manufacturers qualified in time to counteract the likely negative effects of the operation, which could seriously reduce competition in this market, cannot be expected , resulting in a rise in prices, a reduction in choice and a brake on innovation. The Commission also fears that large customers would not have sufficient bargaining power to counter the potential risk of price increases resulting from the transaction.

Fincantieri responded to this reasoning by resolutely dissenting and highlighting how: "After the merger, there would still be three cruise ship builders compared to the current four."

Meanwhile, France has made it known that it remains "very favorable" to the purchase of Chantiers de l'Atlantique (ex Stx France) by Fincantieri. This was announced by the French Finance Ministry after the European Commission's decision to launch an investigation into the operation. "We are convinced that the consolidation of the European shipbuilding sector is essential to strengthen competitiveness and provide the resources needed to finance innovation against competitors, in particular the Chinese, whose arrival on the market is a reality", he said. the Ministry in a statement.