Antitrust Law Daily U.S. settlement will require auto body sheet maker to divest assets to proceed with acquisition of rival
Wednesday, May 13, 2020

U.S. settlement will require auto body sheet maker to divest assets to proceed with acquisition of rival

By Stephanie K. Mann, J.D.

Novelis to divest Aleris’s entire aluminum automotive body sheet operations in North America.

After securing arbitration in first use of its authority under the Administrative Dispute Resolution Act to resolve a merge dispute, the Department of Justice Antitrust Division has filed a proposed final judgement with the district court in Akron, Ohio, to require aluminum auto body sheet manufacturer Novelis, Inc. to divest Aleris’s entire North American aluminum auto body sheet operations. The proposed final judgment, if approved by the court, would settle the Antitrust Division’s concerns that Novelis’s proposed $2.6 billion acquisition of Aleris would harm competition in the aluminum automotive body sheet (ABS) market as the two companies were among only four ABS manufacturers in North America (U.S. v. Novelis Inc., Case: 1:19-cv-02033).

Prior to filing a complaint to block Novelis’s proposed acquisition of Aleris, the Antitrust Division reached an agreement with defendants to refer the matter to binding arbitration if the parties were unable to resolve the Antitrust Division’s competitive concerns with the defendants’ transaction within a certain period of time. Pursuant to the arbitration agreement, following the close of fact discovery, the matter was referred to binding arbitration to resolve the issue of product market definition.

After a ten-day arbitration hearing, the arbitrator ruled in the government’s favor, holding that aluminum auto body sheet constituted a relevant product market. Because the Justice Department prevailed, the proposed final judgment requires Novelis to divest Aleris’s entire aluminum ABS operations in North America to preserve competition in the relevant market. Under the proposed order, the assets will be divested to a production facility in Lewisport, Ky.—Lewisport Rolling Mill—and a technical service center located in Madison Heights, Mich.—Innovation Center.

Novelis reported last month that it had completed the acquisition of Aleris. The closing followed shortly after the company announced that it had received European Commission (EC) approval of a buyer for assets to be divested under an agreement with the EC.

Attorneys: Bashiri Wilson, I, U.S. Department of Justice, for the United States. Allyson M. Maltas (Latham & Watkins LLP) and Karey E. Werner (Vorys, Sater, Seymour and Pease LLP) for Novelis, Inc. Aleksandr Livshits (Fried, Frank, Harris, Shriver & Jacobson LLP) and Douglas L. Shively (Baker & Hostetler LLP) for Aleris Corp.

Companies: Novelis, Inc.; Aleris Corp.

MainStory: TopStory AcquisitionsMergers Antitrust AntitrustDivisionNews GCNNews

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