EC/FTC argue against merger of Tencel and Lenzing Lyocell (2001)

This extract from an EC press release dated 17/10/2001 just surfaced.  It summarises the other series of posts on this issue in the 2001 folder.

Promises to licence the process, and  to toll-manufacture for a licencee were inadequate commitments (made by CVC) to allow the merger.  (Memo to self:  what changed to allow the deal when Lenzing proposed it?)

The market for lyocell technology was worldwide.

As regards lyocell production, the Commission took the view that it was not necessary to define the geographical market since Lenzing and Acordis are the only producers worldwide...

...and the only two players in the market for lyocell production and processing technology currently able to offer "ready-to-operate" technology.  Together, the parties hold the vast majority of all existing patents for lyocell production and treatment, and market entry in this market is difficult. The Commission therefore concluded that the concentration would create a dominant position in the both lyocell production and technology markets. During the second phase of the review the parties submitted the following commitments: (i) a non-exclusive licence with regard to lyocell; (ii) a toll-manufacturing arrangement whereby the parties would produce lyocell for the licensee; (iii) a non-exclusive licence with regard to Galaxy tampon fibre. The Commission took the view that these commitments were not adequate to eliminate the concerns raised by the concentration. The FTC, which is the competent US antitrust authority in this case, and the Commission have remained in close and mutually beneficial contact all along the procedure by sharing information, and by discussing and developing consistent analysis of the main substantive issues. This case therefore constitutes an example of co-operation and mutual understanding between US and EU competition authorities. Source: EU Press release

Lyocell in Lenzing Annual Reports (2000)

The 2000 Lenzing annual report was dominated by the images of Naomi Campbell who had starred in their new advertising campaign and who may have been partly responsible for improved sales.  The paragraphs most relevant to lyocell follow:

Lyocell business activities were very good. In fiscal  2000 sales almost tripled, as compared to the year  before. The results are still negative, but have  clearly improved over 1999.  This growth is due to an optimized type mix, on  the one hand, and to an intensive worldwide  marketing strategy, on the other.  

The production facilities at Heiligenkreuz, where  the production capacity was expanded in June to amount to 20,000 tonnes, worked to capacity and  are being stepped up continuously. In parallel,  minor de-bottlenecking investments improved the  performance of the plant.The production  capacity was increased to 20,000 tonnes  per year in June 2000. After almost two years of  reviewing, the EU Commission confirmed that the  entire package of grants for the Lyocell plant at  Heiligenkreuz, Austria, is in full compliance with  the EU cartel-law provisions.

For the new fiber advertising line, we succeeded in  signing up Naomi Campbell, the world-famous  super model. She is to promote with and familiarize  the end user with Viscose, Modal and Lyocell - our  fibers made of timber, the natural raw material.  In addition to fibers - our core business - Lenzing  Plastics, Lenzing Technik and the paper division  also made major contributions to sales and results.  In the year 2000, our employees had - for the first  time - the opportunity to share in the success of  the company through a new success-oriented  payment scheme. Thus also our employees  benefitted from the good results.   

"ProViscose" - a blend of Lyocell and Viscose -  showed a positive development. This fiber blend  did not only boost sales of Lyocell, but also helped  Lenzing set a new quality standard for the viscose  segment by clearly improved product characteristics.  On account of the combination, the specific features  of both fiber types can implement their full  potential. As a result, product and care features,  such as dimensional stability, have been clearly  improved. After initial successes with bed linen  and terrycloth items, the home-textile applications  will be expanded. In addition, there are plans for  Lyocell to be used for nonwovens applications, a  market segment with great potential. 

The Lyocell LF fiber, launched in the fall of 2000,  opens up new product applications. The demand  for nonwovens fibers and ProViscose is moving in  the right direction.     

Click here to download the full report

Lyocell in Lenzing Annual Reports (1999)

These are the relevant paragraphs from the Lenzing Annual Report of 1999. Pre-blending lyocell with viscose emerges as a way to tackle some of the processing issues and presumably to introduce some lyocell to textiles at a lower price. The idea seems to have been revived this year as Eurocel(tm) for the nonwovens market.

Dr Haio Harms, Head of Research and Development at Lenzing since 1983...

"It is part of our strategy for success to invest a certain amount of our

resources into medium and long-term targets. Lenzing's research made a

decisive contribution to the company's competitiveness, while competitors

who lacked that farsightedness had to give in to crowding-out competition.

The broad product range, the value-added by spinoff products of the pulp

production, the solutions to pollution-control issues and the ongoing

improvements in efficiency would be impossible without constant efforts.

This also applies to innovations that pay off in the longer run."

Again this year, the top priority regarding Lyocell developments was on optimizing the Lyocell technology. In this connection, we were able to achieve major progress in broadening the primary-material base, in making more efficient use of our plants and in making the quality level more even. On account of efforts to expand the range of types and to make processing and finishing methods easier, we were able to expand our market base. The spectre now ranges from a Lyocell micro fiber to coarse-titer wool types and matted fibers. Special scope was given to further developing the technology used to produce Lyocell fibers with a reduced fibrillation tendency.

Dr Franz Raninger, Member of the Board of Management with Lenzing since 1994...

“Lyocell offers good growth opportunities. However, the traditional technology, based on viscose, still contains further potential for innovation. The numerous product developments at Lenzing in recent years are a clear proof of this point.”

In 1999, Lenzing took another important step in the direction of focussing on high-quality special fibers by developing new fiber blends, consisting of Modal/Lyocell and Viscose/Lyocell that can be used for textile applications.

Lyocell in Lenzing Annual Reports (1998)

1998 saw the last appearance Courtaulds annual report and is currently the first available year for Lenzing Annual Reports on their website.  Here are the paragraphs relevant to what was then called Lenzing Lyocell, the production of which was started at the Heiligenkreuz site during that year. Industrial scale Tencel production was started by Courtaulds 6 years earlier in Mobile Alabama. (This report is notably devoid of photographs.  Two years later, the 2000 report had photos of Naomi Campbell throughout.)

...Although numerous  intensive marketing efforts  and technical improvements  were made, the sold quantities  of the new fiber fell considerably short of the budgeted  figures. The introduction  of Lyocell to the market  must be expected to require  considerably more time than  was originally assumed and  will require additional funds.  The Board of Management  is, however, convinced that  this fiber of is great potential  for the future, although  Lyocell will continue to generate  a sometimes considerable  burden on the business  result in the years to come.

...The research expenditure of Lenzing AG amounted to ATS 157.4 million (after ATS 200.1 million). The amount represents 2.6 per cent of the Lenzing sales, which is a remarkable figure also by international comparison. As before, research in 1998 focussed on the further development of the Lyocell technology, especially in the transition of a low-fibrillation Lyocell fiber to large-scale technical production and market maturity, as well as on...

Tencel Dinner at Mancetter Manor (1993)

There had been a project review meeting in Courtaulds Research in Coventry during the day and this dinner was arranged, I think by Robin Thomas, at nearby Mancetter Manor.  From left to right, Calvin Woodings, Glenys Thomas, Robin Thomas, ??, Glyn Raven (US) , Clive Knee (US), ??, Pat White, Alan Jones, ??, Bob Feil (US), Omori-san.  

(If anyone can replace the ?? with names or knows who took the photo please comment.)