Chemical Firm Ordered to Sell Stake

The Fair Trade Commission (FTC) ordered OCI Chemical Corporation, which acquired Columbian Chemicals Korea (CCK), to take the corrective action of selling all the shares or one of the factories that it acquired.

The FTC explained its rationale behind the decision by announcing on June 4 that with OCI Chemicals Corporation’s acquiring CCK, it has become highly likely that competition might be limited, for the number of carbon black manufacturers has decreased to two—OCI and Korea Carbon Black (KCB)—and OCI’s market share amounts to 64.2%.

Accordingly, OCI Chemicals Corporation has to sell all 85% shares of CCK within one year or dispose of one of two carbon black factories in Pohang and Gwangyang to a third party.

“It is also possible that through this acquisition, OCI Chemicals Corporation might achieve technological efficiency by, for example, increasing production of carbon black for special purposes. So we allowed it to choose between two options,” said Ji Chul-ho, director of the corporate consolidation team at the FTC.

If an inevitable reason is recognized, the FTC plans to provide OCI with a one-year grace period before implementing the corrective action.

In March, in association with JP Morgan, OCI Chemicals Corporation acquired 100% shares of Columbian Chemicals Company (CCC), the world’s third-largest carbon black manufacturer based in the U.S., and reported a corporate consolidation. CCC has 85% shares of CCK and 16 affiliates in Brazil, Germany and other countries around the world.

Carbon black is used as rubber reinforcement, such as in tires and hoses, as well as paint and ink.

OCI Chemicals Corporation responded that it would make a formal objection and that, if that is not accepted, it would be ready to file a lawsuit.

Hyun-Jin Park Chang-Won Kim witness@donga.com changkim@donga.com