A global aluminum rolling manufacturer recently reaffirmed its commitment to complete the acquisition of an Ohio-based aluminum rolled products producer, despite a U.S. Department of Justice (DOJ) lawsuit to block the transaction.
Novelis Inc. gave this statement regarding its proposed acquisition of Aleris Corporation, stating the company “intends to vigorously defend against the DOJ’s challenge”, believing it to be “without merit.”
The “acquisition will strengthen the aluminum industry’s ability to compete against steel in U.S. automotive body sheet market,” notes a release from Novelis.
“The DOJ lawsuit is based on the contention that the only relevant competition among automotive body sheet providers is that among aluminum manufacturers such as Novelis and Aleris. It ignores competition from steel automotive body sheet, even though steel automotive body sheet is currently used for nearly 90 percent of the market.”
“The day-to-day reality of the automotive body sheet market is aluminum automotive body sheet striving to take share from steel, and the steel automotive body sheet companies fighting back,” said Steve Fisher, president and CEO, Novelis Inc. “We are disappointed that the DOJ has missed this, but also confident that in the next phase of this process the full scope of the competition we face will be recognized appropriately. Our merger with Aleris threatens no one, and to the contrary will strengthen our ability to compete against steel, meet growing customer demand for aluminum, achieve our recycling goals, and bolster our sustainability platform worldwide.”
The Department of Justice filed the civil antitrust lawsuit seeking to block Novelis’s proposed acquisition of Aleris “in order to preserve competition in the North American market for rolled aluminum sheet for automotive applications.”
The Antitrust Division’s lawsuit alleges that the transaction would combine two of only four North American producers of aluminum auto body sheet.
“Automakers increasingly need aluminum auto body sheet to satisfy American consumers’ demand for larger vehicles that are lighter and more fuel-efficient. The loss of a competing supplier of aluminum auto body sheet ultimately would harm American car buyers,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division.
The Antitrust Division has agreed with defendants to refer the matter to binding arbitration should certain conditions be triggered. The arbitration would resolve the issue of product market definition. This would mark the first time the Antitrust Division is using this arbitration authority to resolve a matter.
“This arbitration would allow the Antitrust Division to resolve the dispositive issue of market definition in this case efficiently and effectively, saving taxpayer resources,” said Delrahim. “Alternative dispute resolution is an important tool that the Antitrust Division can and will use, in appropriate circumstances, to maximize its enforcement resources to protect American consumers.”
According to legal analysts for corporate law firm Jones Day, “Most DOJ merger challenges have taken more than five months from filing of a complaint to a district court decision.”
“For this reason, the parties may have believed that pursuing arbitration on market definition—a topic that in traditional litigation can consume significant time for discovery and briefing—would provide them with deal certainty sooner than litigation. DOJ, in turn, may have viewed the decision as consistent with its larger policy goal of streamlining the merger review process.”
Read more here:
Novelis Reaffirms Commitment to Acquisition of Aleris (Novelis press release)
Justice Department Sues to Block Novelis’s Acquisition of Aleris (Department of Justice)
DOJ Merger Challenge Makes Unprecedented Use of Arbitration to Determine Market Definition (Lexicology)
