Cargotec and Konecranes both offer a range of container handling equipment and services to port terminals and other industrial customers worldwide. The two companies announced an agreement to merge in a $5bn deal in October 2020.

“These are global businesses that make significant sales to UK customers, which is why it is critical for us to ensure that competition in the UK is protected,” said Martin Coleman, chair of the CMA inquiry group.

“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.”

Following an in-depth Phase 2 investigation, CMA found the merger would harm competition in the supply of a range of container handling equipment products. Within these markets, the CMA’s investigation found that Cargotec and Konecranes are competing closely for business in the UK, and that UK customers would have few remaining alternative suppliers after the merger.

While the merging businesses suggested that there would be an increased competitive threat from Chinese suppliers across all markets in future, the CMA found this would not be sufficient to prevent the significant loss of competition that the merger of two key established suppliers would bring about.

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 range of container handling products.

Cargotec and Konecranes submitted remedies to seek to address the CMA’s concerns. The proposed remedies would have involved carving out packages of assets from within each of their existing container handling equipment businesses, which could then be sold as a new combined business.

Having tested the proposed remedies thoroughly, the CMA found these asset packages lacked important capabilities, so would not enable whoever bought them to compete as strongly as the merging businesses do at present. The process of carving out these assets from the merging businesses’ existing operations, and knitting them together into a new combined business, would be complex and risky, so could significantly impair how effectively the purchaser of that business would be able to compete.

As Cargotec and Konecranes declined to consider alternative remedies that would have involved the sale of one of their existing container handling equipment divisions, the CMA concluded that only the prohibition of the merger could effectively address the wide-ranging concerns that have been identified.

The deal is being reviewed by a number of competition authorities. While each investigation is being carried out independently, the CMA has engaged closely with other agencies throughout its investigation. The European Commission announced the outcome of its investigation on February 24, 2022 and investigations in several other jurisdictions (including Australia and the US) remain ongoing.