In an unusual move, the UK government’s Competition and Markets Authority (CMA) has decided that the commercial cleaning products giant Ecolab must divest Holchem, a UK cleaning chemicals business that it acquired in December 2018. The CMA ruled that the deal would lead to unfair competition and an increase in prices for Holchem’s customers in the food and drink industry.
Ecolab acquired Holchem, a family-owned firm with annual sales of about $55 million, without informing the CMA. Companies acquiring businesses in the UK are not legally required to refer their deals to the authority, but those that don’t run the risk of a possible reversal, CMA said.
The CMA said it looked at ways to limit the impact of the acquisition on the market but concluded that divestment is the only effective option. “Now, Ecolab must sell-off Holchem to a new owner, which must be approved by the CMA,” the competition authority said in a statement.
Ecolab responded that it “strongly disagrees” with the CMA’s decision and that it believes the acquisition would lead to a better outcome for customers. Ecolab will review the CMA’s report and “carefully consider its options and next steps,” CEO Douglas M. Baker Jr. said in a statement.
Although Ecolab completed the deal almost a year ago, the US firm operated Holchem as an independent company. “We did not integrate and continued to act as competitors in the market,” Ecolab said.