The European Commission has apparently initiated an in-depth probe into BASF SE’s planned acquisition of Solvay SA’s nylon business. As per reliable sources, the commission is concerned over the prospect of the deal leading to reduced competition in the supply of crucial materials in the nylon manufacturing chain.

For the record, BASF had declared last year in September that it plans to conclude the transaction, worth USD 1.87 billion, in the third quarter of 2018.

Commenting on the need to assess the proposed acquisition, European Commissioner for Competition, Margrethe Vestager was quoted stating that nylon is not only utilized in everyday products such as carpets, sports shoes, and clothes but is also a significant industrial raw material used in manufacturing lighter cars and engines. She further added that the commission needs to investigate the proposed takeover quite prudently as only a handful of nylon producers offer essential inputs to manufacture numerous products and that would lead to higher prices for customers.

As has been noted in the press release of the European Commission, a merger between BASF and Solvay’s respective nylon businesses would result in the creation of a company that is likely to be around double the size of its competitors.

Reportedly, Solvay is regarded as the only chemicals giant with manufacturing assets at all levels of the nylon production chain in the European Economic Area. Moreover, the Belgium based company presently sells a significant portion of its intermediates to other firms manufacturing nylon fibers and compounds at numerous levels of the value chain.

As per sources familiar with the development, there is no indication that the new entrants would be able to preserve the competition given that the access to essential inputs is restricted. Reportedly, the Commission has to take a decision until 31 October 2018 i.e. within 90 working days.