The US Department of Justice (DoJ) has intervened following a proposed automotive company merger that would have increased prices.
Auto parts supplier Tupy has agreed to restructure its acquisition of Teksid, which produces iron and castings for the automotive industry, following concerns the merger broke antitrust laws and discouraged competition.
The DoJ argued the merger would result in higher prices and reduced quality and timeliness of production for crucial components used in heavy-duty engines.
Tupy is the largest supplier of iron blocks and heads for heavy-duty engines to customers in North America, while Teksid is the second-largest supplier of such products in the region.
Under an initial agreement made in 2019, Tupy would have acquired the entire global cast iron components business from Teksid’s parent company Stellantis N.V, combining the two biggest North American suppliers of engine blocks and cylinder heads for heavy-duty engines. These are vital for the construction of large trucks, freight transport and agricultural equipment.
Following review and input from US competition authorities, Tupy will acquire only Teksid’s iron operations in Brazil and Portugal. Teksid will retain its iron operations in Mexico and continue to compete with Tupy to supply US customers.
The new deal has been valued at €67.5m.
Richard A. Powers, acting assistant attorney general in the DoJ’s Antitrust Division, said: “Tupy’s decision to restructure their merger is a victory for American engine manufacturers and consumers.
“I commend our team for their diligence in conducting a thorough investigation, a testament to the division’s resolve to enforce the antitrust laws. As originally proposed, the transaction would have eliminated competition that keeps prices low and quality high for vital industries such as transportation and agriculture.”
☛ Want to stay up to date with the news? Sign up to our daily bulletin.