Swedish Competition Authority moves to prohibit pipe deal

Logstor is the company that intends to acquire its competitor Powerpipe. Both companies sell pipes for district heating networks. District heating is the most common form of heating in Sweden. Around 90 percent of all multi-family dwellings and more than half of all residential and commercial premises are heated by the district heating network. Special insulated piping is used when the networks are being expanded and renewed.

“Logstor and Powerpipe are each other’s main competitors. The merger would significantly impede the competition in the market. All of Sweden’s district heating customers will be the losers,“says the Swedish Competition Authority’s Director General Dan Sjöblom.

There are today four full-range suppliers of direct heating pipes to Swedish customers. If the two largest are permitted to merge, the result will be one very large, predominant player with a market share of 70-80 percent.

“When the two largest players in a limited-player market merge, there is a big risk of the competition being significantly impeded,” says Dan Sjöblom.
The Swedish Competition Authority is therefore bringing an action to the Stockholm City Court to prohibit the corporate merger. The court has six months to make a decision.

The motion for prohibiting the deal entails a fine of SEK 250 million that the companies face if they proceed with the merger despite the prohibition.

Read the application, dnr 118/2016 (in Swedish)