THE BALL-REXAM MERGER: THE CASE FOR A COMPETITIVE CAN MARKET Geoffrey A. Manne & R. Ben Sperry ICLE Antitrust & Consumer Protection Research Program White Paper 2015-3 ICLE | 3333 NE Sandy Blvd., Suite 207 | Portland, OR 97214 | 503.770.0652 |
[email protected] @laweconcenter | www.laweconcenter.org THE BALL-REXAM MERGER: THE CASE FOR A COMPETITIVE CAN MARKET Geoffrey A. Manne & R. Ben Sperry EXECUTIVE SUMMARY In this paper we address the law and economics of merger review in the context of an unexpectedly complex market: aluminum can manufacturing and distribution. With the proposed acquisition of British can manufacturer Rexam PLC by Amer- ican can manufacturer Ball Corp., competition authorities around the world — including those in Brazil, the European Union, and the United States — have re- cently focused their attention on this area. It’s a difficult task to estimate the future consequences of business conduct. Often it is incorrectly assumed that “big is bad,” and that companies seek to merge pre- cisely because their ability to profit at competitors’ and consumers’ expense is in- creased with their larger size. But, at the same time, antitrust authorities have increasingly come to understand that big doesn’t necessarily mean bad — that economies of scale, managerial efficiencies, technological efficiencies, and the like enable firms to compete more effectively in evolving markets. The production and distribution of aluminum cans is a remarkably complex enter- prise, jolted by technology, evolving demand, changing bargaining