THE owners of a Chirk wood factory are officially under investigation by the European Commission (EC) over its purchase of a factory in Poland.

Kronospan will be under an 'in-depth' investigation, under EU Merger Regulation, after the EC received a referral from the Polish competition authority on March 8 this year after the company's purchase of Pfleiderer Polska.

According to EC executive vice-president Margrethe Vestager, in charge of competition policy, there are concerns a merger would reduce competition for the supply of wood panels in the region.

She said: “Kronospan and Pfleiderer Polska are the largest suppliers of wood-based panels which are important inputs for kitchens and furniture.

"These markets are already consolidated, so we need to carefully assess whether the changes in the competitive landscape prompted by the proposed acquisition would lead to higher prices and less competition in this sector.”

A spokesman for the EC confirmed the initial market investigation identified a number of preliminary concerns relating to the parties' strong market position in the supply of certain types of wood-based panels.

They added: "This includes whether the transaction may lead to higher prices and less choice for construction and industry customers as well as for end-consumers for particleboards, fibreboards and components.

"For each of these types of wood-based panels, the parties hold high combined market shares in several catchment areas around their production plants located in Eastern Europe, with limited or no credible alternative suppliers remaining following the transaction.

"As a result of its combination with Pfleiderer Polska, Kronospan could engage in input foreclosure strategies with regards to particleboards, fibreboards and components.

"The transaction may increase the likelihood of the parties being able to coordinate their behaviour."

According to reports around the investigation, neither Kronospan or Pfleiderer Polska submitted documents to address the preliminary concerns.

The EC now has until Monday, August 22 to make a decision on whether the merger between the Austrian-founded Kronospan and the Polish base of German company Pfleiderer Group has broken competition rules.

Kronospan has been approached for comment.