CCP Approves Lotte Chemical’s Engro Polymer Stake Acquisition

ISLAMABAD: The Competition Commission of Pakistan (CCP) has approved Lotte Chemical Pakistan Limited’s proposed acquisition of a stake in Engro Polymer & Chemicals Limited (EPCL) from Engro Corporation Limited.

The CCP approved the transaction after a Phase-I competition assessment under the Competition Act, 2010. The commission concluded that the proposed acquisition is unlikely to significantly reduce competition in Pakistan’s chemical industry.

CCP Reviews Lotte Chemical’s Acquisition

Lotte Chemical Pakistan Limited manufactures and supplies purified terephthalic acid (PTA) in Pakistan. The chemical serves as a key raw material in the production of polyester and polyethylene terephthalate (PET).

Meanwhile, Engro Polymer & Chemicals manufactures polyvinyl chloride (PVC), caustic soda, hydrogen peroxide and other chlor-alkali products.

During its assessment, the CCP identified PVC, caustic soda and hydrogen peroxide as the relevant product markets. It also defined Pakistan as the relevant geographic market.

The commission found that Lotte Chemical does not operate in any of these markets. Furthermore, neither the company nor its associated or affiliated businesses purchase products from Engro Polymer.

As a result, the proposed acquisition does not create any horizontal or vertical overlap between the two companies.

Acquisition Unlikely to Reduce Competition

The CCP noted that Engro Polymer is Pakistan’s sole domestic manufacturer of PVC. However, imports provide an important source of competition in the market.

In the caustic soda and hydrogen peroxide markets, Engro Polymer holds comparatively smaller market shares and faces competition from other suppliers.

The commission also observed that the acquisition would change the ownership and control of Engro Polymer. However, the transaction would not, by itself, increase the company’s production capacity, sales or output.

Therefore, the CCP does not expect the acquisition to increase market concentration, create barriers to entry or significantly strengthen either party’s market power.

CCP Authorizes Transaction Under Competition Act

Based on its Phase-I assessment, the commission concluded that the proposed acquisition is unlikely to substantially lessen competition or create or strengthen a dominant market position.

The CCP has therefore authorized the transaction under Section 31(1)(d)(i) of the Competition Act, 2010.

The commission said the approval reflects its commitment to facilitating investment and corporate transactions while protecting competition, market efficiency and consumer welfare.

The decision allows the proposed transaction to proceed from the competition-law perspective, subject to any other applicable regulatory requirements.