New York: Billionaire Kumar Mangalam Birla's Hindalco Industries faces another regulatory hurdle for its proposed $2.6-billion purchase of US aluminium parts maker Aleris Corp., this time from Washington.
The Justice Department filed a civil antitrust lawsuit seeking to block the purchase by Hindalco's US unit Novelis Corp. The case cited the need to preserve competition in the North American market for rolled aluminium sheet for automotive applications. The deal also faced antitrust objections in the European Comm-ission earlier this year.
The transaction if allowed to proceed, would enable Novelis to lock up 60 per cent of projected total US automotive body sheet capacity and the vast majority of uncommitted capacity, enabling the company to raise prices, reduce innovation and provide less favourable terms of service to the detriment of automakers and ultimately American consumers, the US said.
The lawsuit ignores the competition from steel, which has almost 90 per cent share of the automotive body sheet market, Novelis said in a statement on Wednesday. The case isn't expected to impede the closing of the deal by Jan. 21, "even if a remedy is required to address the DOJ's competitive concerns," it said.
Hindalco offered some antitrust commitments to the European Commission to gain regulatory approval for the deal, according to information on commission's website posted last month. The deadline for taking a final decision on the deal is October 7, the commission said.
