Regulators were concerned that a sale to China International Marine Containers would have led to higher prices and less supply chain resiliency.
China International Marine Containers dropped a plan to acquire Maersk Container Industry for $987.3 million following a Department of Justice investigation, the agency announced on Thursday .
The Department of Justice’s Antitrust Division found that if Maersk’s cold storage container division were acquired by the China-based logistics company, it would have “ consolidated control of over 90% of insulated container box and refrigerated shipping container production worldwide in Chinese state-owned or state-controlled entities,” according to the DOJ release.
The acquisition would have combined two of the world’s four insulated container box and refrigerated shipping container suppliers, according to the agency. Maersk announced the sale in September 2021, and it was expected to close by the end of the year following regulatory approval.
Assistant Attorney General Jonathan Kanter said in the announcement that, if allowed, the deal would have led to higher prices, lower quality and a less resilient supply chain.
“It would have cemented CIMC’s dominant position in an already consolidated industry and eliminated MCI as an innovative, independent competitor,” Kanter said in a statement. “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.”
A.P. Moller-Maersk CFO Patrick Jany called the result “unfortunate.”
“Maersk will continue to be a proud owner of MCI for the foreseeable future, and we will now assess the best structural set-up for MCI to ensure the long-term development of the business,” he said in a statement.
Maersk was selling its refrigerated container-making business in a bid to focus more on integrated container transport and logistics services, part of its “business transformation,” CEO of Fleet and Strategic Brands Henriette Hallberg Thygesen said in a statement announcing the acquisition.
The termination of the deal comes months after the Department of Justice and the Federal Maritime Commission announced their resource-sharing agreement to help bolster the enforcement of competitive market rules in maritime shipping. The February 2022 agreement was a result of the Biden-Harris administration's efforts to bring agencies together to better enforce competition in the industry.
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Topics covered: logistics, freight, operations, procurement, regulation, technology, risk/resilience and more.
The e-commerce giant estimates 40% of its capital investments this year will go toward warehouses and transportation capacity, down from 55% in 2021.
The system is set to go live in Greater China this month, with a North America deployment planned for fiscal year 2024.
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