Rexam’s predator seeks to play down competition concerns as EU launches probe into drinks can makers’ takeover

The US can making giant vying to buy British industrial champion Rexam has sought to play down fears that the deal will stifle competition and could lead to higher prices.

Earlier this year Ball Corporation swooped on Rexam in a £4.3billion takeover that will create the world’s largest beverage can player.

But the deal, which will give it unprecedented share of in the drinks can market, is now being probed by EU competition chiefs. An in-depth investigation was launched by the European Commission into the deal yesterday.

Margrethe Vestager, EU Competition Commissioner, said: ‘Very many of us buy drinks in cans … it is therefore very important that the Commission makes sure that Ball’s takeover of Rexam does not restrict effective competition and so risk price increases that could be passed on to consumers.’

The resulting company will have almost 70 per cent of the European can market – more than twice the 30 per cent market often used by regulators as a suitable level for one company to own to ensure there is fair competition.

But Ball sought to play down fears over the deal’s implication.
It called the investigation, which will last until almost Christmas, a ‘standard step’ in the process of completing a deal.

Ball is also facing probes in the US – where the combined firm will have a 61 per cent market share – and in Brazil, where Rexam only recently expanded its operations at great cost.

There have been fears over the deal’s implications for Britain: while Rexam owns two British plants, Ball owns three.

It is likely that the combined entity will be forced to sell some of these to US rival Crown, which already owns two UK sites and may not have a need for more factories.

There were also questions raised at the time of the deal about the tax structure being used by Ball.

A Daily Mail investigation at the time revealed that 32 of Ball’s disclosed subsidiary companies are based in tax havens.

Furthermore, its British operations are owned by a labyrinth of companies routing ownership through Luxembourg, the Netherlands and the US state of Delaware.

The chain appear to be organised in a ‘tax sandwich’ – a structure used by Google that whittles down its European tax bill to almost zero and was declared ‘immoral’ by MPs.

The merged drinks can company would have total revenues of approximately £10billion and 22,500 employees worldwide.