The European Commission has cleared the way for a merger between two U.S. aluminium panel makers – Novelis and Aleris – to go forward, provided one of the companies sells part of its European business.

After conducting an in-depth investigation into the merger, the Commission said Novelis could buy Aleris if the parties agree to sell part of the European business. Novelis is the world's largest maker of aluminium body sheets, and Aleris makes the same product.

Novelis, which has its headquarters in the U.S., is a global manufacturer of semi-finished aluminium products and recycler of aluminium. It has manufacturing facilities in North and South America, Europe and Asia. The company is a subsidiary of Hindalco Industries Ltd., an India-based supplier of aluminium and copper. Aleris, also headquartered in the U.S., is a global manufacturer of semi-finished aluminium products and has production facilities in North America, Europe and Asia.

In its investigation, the Commission said one of the companies would have to sell part of its European business because it found that the merged company would have very high market share and control a very significant proportion of the manufacturing capacity for aluminium automotive body sheets in the European Economic Area. In addition, the limited number of remaining competitors in the market would not be able to counter a price increase because of their limited spare capacity. The Commission concluded that unless some of the European business be divested, it would result in higher prices for European customers for aluminium automotive body sheets.

To address the Commission's concerns, the parties offered to divest Aleris's entire aluminium automotive body sheet business in Europe, including its production plant in Duffel, Belgium. The proposed divestiture removes the entire overlap created by the transaction.