Notwithstanding the lawsuit by U.S. Department of Justice (DOJ) to prevent the acquisition of Aleris, Novelis reaffirmed its commitment towards the proposed acquisition through a press release. The company says it will strongly defend against the DOJ's challenge which is without any merit adding that the acquisition will only strengthen aluminium’s position against steel in the U.S. automotive body sheet market.
According to Novelis, DOJ lawsuit is ignoring the scope of competition from steel in the U.S. automotive body sheet market, while concentrating on the competition between aluminium manufacturers such as Novelis and Aleris. Steel automotive body sheet currently occupies nearly 90 per cent of the total market and aluminium contributes just 10 per cent.
"The day-to-day reality of the automotive body sheet market is aluminium automotive body sheet striving to take share from steel, and the steel automotive body sheet companies fighting back," said Steve Fisher, President and CEO, Novelis Inc.
"We are disappointed that the DOJ has missed this, but also confident that in the next phase of this process the full scope of the competition we face will be recognized appropriately. Our merger with Aleris threatens no one, and to the contrary will strengthen our ability to compete against steel, meet growing customer demand for aluminium, achieve our recycling goals, and bolster our sustainability platform worldwide," he added.
Novelis says that to justify the lawsuit, the DOJ must prove that there is a distinct "relevant market" for aluminium automotive body sheet and steel automotive body sheet does not threaten the price and quality of it. The DOJ says that steel automotive body sheet usually competes with aluminium automotive body sheet in a very specific segment.
Novelis says the DOG focuses on just a small slice of steel-aluminium competition and ignores the broader competition. It also neglects the strong bargaining power of the manufacturers to ensure competitive pricing.
Novelis is confident that the DOJ suit is not an impediment to closing the transaction by the January 21, 2020. The company is confident of getting all necessary regulatory approvals in the U.S. towards the acquisition.
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