Stainless Steel Me

The proposed huge merger in the Chinese steel market has been blocked .The Fair Trade Commission (FTC)  rejected Yieh United Steel Corp’s (燁聯鋼鐵) proposal to take a more than 34 percent stake in Tang Eng Iron Works Co (唐榮鐵工廠) on concerns that the merger would undermine market competition, the Central News Agency reported yesterday.

The FTC said that if Yieh United acquired a more than 30 percent stake in Tang Eng, the two companies combined would hold more than 50 percent of the market in Taiwan.

The merger would reduce competition as it would give the two companies an advantage to either charge the same price or jointly raise prices, it said.

Late last year, Yieh United submitted a proposal to the commission to acquire the 34 percent stake in its smaller rival, a commission notice said.

The FTC said that although stainless steel production techniques have matured, limitations such as the time it takes to build a plant and the investment cost for hot and cold rolling mills would discourage potential competitors from entering the market.

Yieh United and Tang Eng are the top two producers of stainless steel in Taiwan and the two companies are competitors, the FTC said.

The FTC concluded that the disadvantages of restricting competition outweighed the advantages of the merger to the overall economy. The merger between Yieh United and Tang Eng was therefore rejected.

Founded in 1988, Yieh United, based in Kaohsiung County, is the largest integrated stainless steel mill in Southeast Asia, with total investment exceeding NT$40 billion (US$1.22 billion), its Web site said.

Tang Eng, based in Kaohsiung City, was founded in May 1940 and is the oldest steel company in Taiwan. It was a state-owned enterprise under the Ministry of Economic Affairs until its listing in July 2006.