The European Commission has approved, with restrictions, plans by BASF (HQ: D-67056 Ludwigshafen) and Shell (GB, NL) to form a new polyolefins production joint venture. The Commission said the new company, which would link PP producers Targor (BASF) and Montell (Shell) with PE producer Elenac (already a BASF-Shell jv), must sell three plants for 620,000 t/y of PP resins and 130,000 t/y of capacity for PP moulding compounds, with a combined sales volume of around EUR 500m.

BASF also will be obligated to sell Targor´s “Novolen” production technology for polypropylene, along with its related patents. The new polyolefins company additionally will be required to license its metallocene catalyst technology to third parties. The Commission said that without the divestments combining BASF and Shell capacities would give the jv with the working title Nicole a market share “two or three times that of its competitors.”

Currently, the groups´ combined production assets total 5.7m t/y of PP resin and 680,000 t/y of PP compounds, based in 17 countries. Following the divestments, their combined share of the western European PP market would fall to under 35% for resins and 30% for compounds. The jv still would be Europe´s largest PP producer and fourth in PE, with pro forma sales of more than EUR 5bn. While the plants to be sold have not yet been identified, observers suggest that those using Novolen technology would be the most likely to go. This would include facilities at GB-Wilton, D-Knapsack and Wesseling, NL-Rozenburg, and E- Tarragona.

The EU authority said it had decided to forego a phase two in-depth probe into the merger plans, as the parties had been “open and cooperative” from the outset. The US Federal Trade Commission (FTC) has yet to rule on the plans. Its decision is expected before the end of the second quarter, but restrictions are not thought likely, as the European companies are only minor players in Nafta.