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EU clears Mexico's Nemak

to buy Norsk Hydro's

<font face="arial, geneva, helvetica" size="2">EU regulators on Friday cleared Mexico's Nemak to buy an automotive castings unit from Norway's Norsk Hydro ASA.</font>

<font face="arial, geneva, helvetica" size="2">The European Commission said the deal would not cause antitrust problems in Europe, finding that the new company would not be able to raise prices for the car industry because auto makers often make a key product - aluminum cylinder heads - themselves.</font>

<font face="arial, geneva, helvetica" size="2">Nemak group and Grupo Industrial Saltillo S.A.B de CV, a subsidiary of Mexico's Afla conglomerate, agreed to pay 3.7 billion kroner (US$587 million; euro446 million) for the unit last November.</font>

<font face="arial, geneva, helvetica" size="2">Nemak's purchase would add four Europe-based plants making cylinder heads and engine blocks for the car industry to its own business supplying cylinder heads for passenger cars and light vehicles.</font>

<font face="arial, geneva, helvetica" size="2">The EU executive said its investigation found that suppliers are subject to competitive pressure from car manufacturers' in-house production. Production was even likely to ramp up soon as some market players expand their capacity, it said.</font>

<font face="arial, geneva, helvetica" size="2">"Consequently, the Commission has concluded that the proposed transaction would not give rise to a significant reduction of competition," it said.</font>

<font face="arial, geneva, helvetica" size="2">The castings employs about 2,200 people at plants in Dillingen, Germany; Linz, Austria; Gyor, Hungary and Charlottenberg, Sweden. Norsk took it over when it bought German aluminum company VAW in 2002.</font>

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