Japan Fair Trade Commission announced on Wednesday it approves pending merger plan of Nippon Steel and Sumitomo Metal Industries. The commission finished the screening process based on remedies proposed by the companies on non-oriented electrical steel and high pressure gas pipeline engineering business while the screening deadline is February 7, 2012. The steel makers will accelerate the process toward the merger in October 2012 after the approval from offshore authorities. Through the merger, they try to be best steelmaker with world leading capabilities with annual 70 million tonnes of production.
The commission recognized the users’ concern on non-oriented electrical steel and high pressure gas pipeline engineering business. The commission approved the proposed merger plan with remedies on the 2 items offered by the steel makers. The combined company will have 55% of domestic market share for non-oriented electrical steel. The makers transfer the domestic sales of the all grades products made by Sumitomo Metals to Sumitomo Corporation. Sumitomo Corp. will sell the products up to max domestic annual sales volume by Sumitomo Metals in 5 years to fiscal 2010 ended March 2011 at the average production cost for 5 years after the merger. Sumitomo Metals transfers customers list to Sumitomo Corp. and provides technical support. The merger company has 60% domestic market share in high pressure gas pipeline engineering business through Nippon Steel Pipeline and Sumitomo Metal Pipeline and Piping. The merger company provides UO pipe for high pressure gas pipeline engineering business to new comers at same conditions including price, volume and delivery time as the merger company’s subsidiaries when the new comers request the supply. The merger company also provides new automatic welding machines and the technical support for the new comers at the actual cost if the new comers request the supply. The commission recognized competition pressure for sheet pile and spiral pipe from concrete pile and pipe under the shrinking domestic market. The commission also understood import pressure for hot rolled flat steel and competition pressure for H-beam from the users.