According to a recent report, Hindalco’s United States unit Novelis Corporation has again faced a lawsuit for its $2.6 billion proposed purchase of aluminium parts manufacturer Aleris Corporation. The news came after the Justice Department said this on Wednesday, September 4, citing that this acquisition may create a monopoly in the North American market for rolled aluminium sheet for automotive applications. The deal had also faced antitrust objections in the European Commission earlier this year.
If this transaction is allowed to proceed, Novelis would be able to lock up 60 per cent of the United States’ total automotive body sheet capacity and the vast majority of uncommitted capacity. This will further enable Novelis to raise prices, reduce innovation and provide less favourable terms of service to the detriment of automakers and ultimately the consumers, the US said.
Novelis on Wednesday stated that the lawsuit ignored the competition from steel, which had almost 90 per cent share of the automotive body sheet market.
Head of the Justice Department’s antitrust division Makan Delrahim, on the other hand, said “Automakers increasingly need aluminium auto body sheet to satisfy American consumers’ demand for larger vehicles that are lighter and more fuel-efficient. The loss of a competing supplier of aluminium auto body sheet ultimately would harm American car buyers.”
Steve Fisher, Novelis CEO, said in an emailed statement, “Our merger with Aleris threatens no one, and to the contrary will strengthen our ability to compete against steel, meet growing customer demand for aluminium, achieve our recycling goals, and bolster our sustainability platform worldwide.”
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