Nylons deal dodges competition snags

THE European Commission is expected to give ICI conditional approval today to sell its pounds 700m-a-year European nylons business to Du Pont, the US conglomerate.

Although the Commmission's own merger task force wanted to stop the sale, officials in Brussels think the deal is certain to be approved at a meeting of the 16 European commissioners this morning.

ICI wants to exchange its European nylons business for Du Pont's American acrylics business plus about pounds 250m in cash.

The proposed sale, announced in April, attracted the opposition of the task force because it would have given Du Pont a 43 per cent share of the EC nylon market. The task force's head, Colin Overbury, is said to have reluctantly accepted a plan by Sir Leon Brittan, the EC's competition commissioner, to allow the deal to go ahead under strict conditions.

Under Sir Leon's proposal, Du Pont will be allowed to buy the business only if it allows outside firms to use some of its nylon production facilities, to share its research facilities (including staff), and to have reasonable access to its trade marks and licences. 'This has been carefully tested with the companies to make sure that it's feasible,' a source in Brussels said.

However, a senior EC adviser said last night that seven commissioners oppose the plan, insisting that 43 per cent does not amount to a dominant position as defined in European law. They have accused Sir Leon of trying to expand his empire by treating as dominant positions market shares that would previously have been considered acceptable.

Among those said to be opposing the deal is Martin Bangemann, the EC's industry commissioner. He has a reputation as a supporter of policies to allow the creation of 'Euro-champions' to compete with rivals from Japan and the US.

A source close to Sir Leon conceded yesterday: 'It was a borderline case. The firm probably has a dominant position, but only just.' The decision was based on the view that polypropylene products should not be considered a separate market from nylons; counting the two together makes Du Pont's market share appear less threatening than otherwise.

But he insisted that the task force had not been overruled in order to avoid an outcry over meddling from Brussels. 'This case has nothing to do with political pressure,' he said.