Metals Merger Won't Pass Antitrust Barrier

The Federal Anti-Monopoly Service will not approve the creation of a state-owned metals monopoly, Alexei Ulyanov, the head of the service's industry control department, said Tuesday.

The service may approve, however, a two-way merger between Norilsk Nickel and Metalloinvest while imposing strict restrictions on their joint activities, Ulyanov said at the CIS Metals Summit, organized by the Adam Smith Institute.

He added that the service had not yet received an official application for such a merger from any potential participants.

United Company RusAl chief executive Oleg Deripaska and Norilsk Nickel majority shareholder Vladimir Potanin have proposed the creation of a metals and mining giant based on Norilsk, Metalloinvest, Uralkali, Raspadskaya and Russneft. The businessmen have offered the government a 25 percent stake in the resultant national champion if it would help cover or refinance the participants' multibillion-dollar debts.

The initial plan also included Evraz and Mechel, but the steel producers said they had no intention to merge.

Metalloinvest chairman Alisher Usmanov has said he favors a more modest two-way tie-up with Norilsk, suggesting that the government take a 30 percent stake through state-run Russian Technologies.

"I can see no positive economic effect coming from the merger," Ulyanov said. "There are too many contradictions, and the only thing that would unite all the companies would be the fact that they had all put debt on the government's shoulders.

"We don't need another monster like Gazprom," Ulyanov said in an interview later in the day, adding that he did not approve of any state participation in such a project.

A decision on the merger will be made soon, Arkady Dvorkovich, the Kremlin's top economic aide, told The Moscow Times on Friday.

Ulyanov also said the agency would now be paying more attention to regional administrations that impede competition. He cited as an example measures by the Kemerovo region administration to ban the trade of the nonferrous scrap metal.

"It violated the rights of entrepreneurs," Ulyanov said, "We will now be looking more into the violation on the regional authorities' level.

The agency is now receiving more complaints than before the start of the global financial downturn, he said.

"The financial crisis makes people more desperate, and they now come to us for justice when they wouldn't do it before," he said.