China International Marine Containers Group Ltd., the largest manufacturer of steel containers used for ocean shipping, has abandoned its intended acquisition of shipping giant Maersk’s refrigerated container manufacturing business after objections from U.S. competition authorities, the Department of Justice said Thursday.
A.P. Moller-Maersk agreed in September 2021 to sell Maersk Container Industry A/S and its Qingdao, China, factory to CIMC for $987 million. The divestment is part of Maersk’s strategy to focus on integrated container transport and logistics services. In 2020 the maker of reefer units delivered its most profitable result since beginning 30 years ago.
The proposed transaction would have combined two of the world’s four suppliers of insulated container boxes and refrigerated shipping containers, consolidating control of more than 90% of the market in Chinese state-owned or state-controlled entities, the Justice Department said.
Taicang CIMC Reefer Logistics Equipment Co. is a global supplier of integrated cold chain equipment and solutions. TCRC provides more than 100 kinds of reefer and thermal Insulation products for global customers in more than 50 countries.
“American consumers depend on the global cold supply chain for many of our everyday essentials,” said Assistant Attorney General Jonathan Kaner, head of the antitrust division, in a statement. “CIMC’s acquisition of MCI threatened to harm this critical aspect of our economy, leading to higher prices, lower quality and less resiliency in global supply chains. It would have cemented CIMC’s dominant position in an already consolidated industry and eliminated MCI as an innovative, independent competitor. The deal also would have substantially increased the risk of coordination among the remaining suppliers in the marketplace, most of whom would have been aligned through common ownership and related alliances.”
The DOJ said Germany’s Bundeskartellamt, the federal cartel office, cooperated in its investigation of the CIMC-Maersk deal.
CIMC boasts a market share of about 42% in the container manufacturing sector, according to Drewry. The top three builders are all Chinese.
The Biden administration has adopted a much stronger policy than its predecessor against mergers and acquisitions it believes could harm consumers and don’t maintain a competitive playing field.