CCP approves Lotte Chemical's Rs 19.7bn takeover of Engro Polymer, Pakistan's only PVC maker

The Competition Commission of Pakistan (CCP) has approved Lotte Chemical Pakistan's purchase of Engro Corporation's controlling stake in Engro Polymer & Chemicals (EPCL), the country's only PVC maker, Business Recorder reported on Tuesday 20 October. The deal, agreed on 1 September, covers Engro's entire 56.19% shareholding at Rs 38.6 a share, worth Rs 19.7 billion, ProPakistani reported at the time.

What the CCP found

The CCP cleared the deal after a Phase-I review under the Competition Act 2010, authorising it under Section 31(1)(d)(i). Its reasoning:

• The markets that matter are PVC, caustic soda and hydrogen peroxide in Pakistan.
• Lotte Chemical Pakistan (LCPL), which makes purified terephthalic acid (PTA), the raw material for polyester and PET bottles, does not operate in any of those markets.
• Neither LCPL nor its group companies buys from EPCL, so there is no horizontal or vertical overlap.
• EPCL is the sole local PVC maker, but imports keep it in check, and in caustic soda and hydrogen peroxide it has smaller shares and real competitors.

The commission said the change of owner does not add capacity or output, so it does not expect higher concentration or new barriers to entry, and concluded the deal is unlikely to substantially lessen competition.

The deal so far

The sale was subject to regulatory approvals and other customary conditions, so other steps under takeover rules may still follow. Neither company has announced a completion date.

Why it matters

EPCL's PVC goes into the pipes, window frames, cables and flooring used across Pakistan's construction industry, and its caustic soda is a staple input for textiles, soap and paper. Under Lotte, the plant at Port Qasim, Karachi, would sit beside its PTA business in the same industrial zone.

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