FTC admonishes Wilhelmsen Maritime Services’ acquisition of Drew Marine Group

The Federal Trade Commission has extended an administrative complaint charging that Wilhelmsen Maritime Services’ proposed $400 million acquisition of Drew Marine Group would impinge the antitrust laws by lessening competition in an important market for marine water treatment chemicals and services incorporated by global fleets.

Marine water treatment chemicals and services are used by tankers,  container chips, bulk carriers, cruise ships and military support vessels to maintain critical on-board equipment.

Wilhelmsen, based in Norway, is the world’s largest supplier of water treatment chemicals and services to global fleets, and New Jersey-based Drew is the second-largest. The complaint alleges that the companies are each other’s closest competitors on numerous competitive dimensions that are important to customers, including product scope, quality and consistency; technical service capability; and global distribution footprint. According to the complaint, head-to-head competition between Wilhelmsen and Drew provides substantial benefits to global fleets in the form of lower prices and better service. The FTC alleges that if consummated, the merger would result in a company controlling at least 60 percent of the global marine water treatment chemical and service market. The next closest competitor represents an inferior choice for global fleets, and would control less than 5 percent of the market according to the complaint.

The complaint alleges that new entry or expansion by existing producers would not be timely, likely, or sufficient to counteract the anti competitive effects of the acquisition. To replace the competitive significance of Drew in the marketplace, a potential entrant would need to establish a worldwide distribution network, with the ability to provide consistent, high-quality products, obtain necessary equipment manufacturer approvals along with relevant regulatory and safety approvals, and build a reputation for strong technical and customer service capabilities.