WASHINGTON, Sept 4 (Reuters) - The U.S. Justice Department on Wednesday filed a lawsuit aimed at stopping Novelis Inc’s proposed purchase of Aleris Corp because of concern over higher prices for aluminum sheet used to make cars.
The department said in a statement that the deal would combine two of the four major producers of aluminum to make automobile bodies. The department described Aleris as an “aggressive competitor” and said that the deal would give Novelis up to 60 percent of projected domestic capacity.
The $2.6 billion deal was announced in July 2018. Aleris had previously struck a deal to be purchased by Zhongwang USA, an investment firm backed by a Chinese tycoon, but scrapped it in late 2017 after a national security panel, the U.S. Committee on Foreign Investment in the United States, failed to approve it.
Neither Novelis, which is U.S.-based but owned by India’s Hindalco Industries, nor Aleris immediately responded to a request for comment.
Unusually, the Justice Department’s Antitrust Division agreed with the companies to use binding arbitration to define the product market, which is usually the key battle in any antitrust fight as companies seek to make the relevant market as large as possible in order to make themselves look like relatively small players.
“This arbitration would allow the Antitrust Division to resolve the dispositive issue of market definition in this case efficiently and effectively, saving taxpayer resources,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division, said in a statement.
Reporting by Diane Bartz; Editing by Cynthia Osterman