The Federal Antimonopoly Service (FAS) approved the application of the Mikhailovsky Combine of Building Materials (Mikhailovsky KSM, part of Smikom, which is associated with Oleg Deripaska's cousin Pavel Ezubov) for the purchase of EUROCEMENT group from Sberbank, however issued an order to him. This is stated in the message of the FAS press service dated June 8, 2021.
Mikhailovsky KSM won the auction for Eurocement in April, bypassing such contenders as Gazmetallproekt of Lev Kvetnoy and the head of Sibur Dmitry Konov, agreeing to pay 161 billion rubles for the asset with an initial contribution of 1.5 billion rubles.
EUROCEMENT group is the largest cement producer in Russia, which owns 16 plants in the European part of the country (the capacity of 13 of them is 45.9 million tons per year, three more plants are mothballed). Its share in the market for the sale of cement in the Central Federal District and in the North-West in 2019 and 2020 was over 35 %, stated FAS. According to the company's own data, in 2019 it occupied 49 % of the Central Federal District market and 60 % of the Northwestern Federal District.
Mikhailovsky KSM and other companies belonging to the Smikom group controlled 9% of the market in the Central Federal District. Therefore, the purchase of EUROCEMENT group will lead to the strengthening of the group's dominant position in this macro-region, which may lead to a restriction of competition, notes FAS. In addition, the buyer will control more than 50 % of the cement production capacity in the Central Federal District, in the North-West, in the Volga and Ural Federal Districts (in 2019, Eurocement had 32 % of the capacities in the Volga Region and 25 % in the Urals).
Due to its high market share, FAS instructed Mikhailovsky KSM to ensure the execution of all short-term or long-term contracts, contracts for the sale of cement, in force at the date of the transaction and related to the supply of products. The company must also ensure that cement is still technologically feasible if there is a demand for it or purchase orders are placed where cost-effective production is possible.
If the combined company decides to increase the price of cement by more than 5 %, it must submit to FAS a written justification within 15 calendar days of reasons for the increase in prices with supporting documents and calculations, including copies of price lists.
Within four calendar months from the date of the transaction, Mikhailovsky KSM must develop, approve and submit to the antimonopoly service policy for the sale of products, containing, in particular, the terms and conditions for the shipment of cement and its payment, as well as the conditions for granting and the amount of discounts, including those that depend on the volume of consumption.
The regulation, which will be in effect for five years, does not say anything about the need to sell assets in those regions where the share of the combined company exceeds 50 %. However, if the conditions set by the FAS are not met, the “daughter” “Smikom” faces a fine in accordance with the Code of Administrative Offenses. This can also become the basis for invalidating the transaction at the suit of the antimonopoly service.
