The Italian unit of ArcelorMittal Distribution Solutions is planning to create a new joint venture with Italian service CLN (Coils Lamiere Nastri), said a report.

The European Commission’s directorate-general for competition is in the process of reviewing the combination and has asked interested parties to submit their observations by the beginning of March, according to Platts Breaking News.

The two companies are active in the distribution and processing of flat steel products, and are set to create a new entity in Italy which will have a strong national reach and become one of the country’s leading flat steel distributors.

A source with knowledge of the situation said the new joint venture will include mainly CLN’s steel service center operations, without including other downstream activities such as stamping.

The new company will further consolidate the Italian flat steel distribution sector, as post-merger four companies are expected to control more than half of the volumes in the country: Ilva, Marcegaglia, Gabrielli and the new entity, the report said citing the source.

"ArcelorMittal is particularly focused in Italy in the distribution of coated products, while CLN is stronger in HRC and pickled; the combination of the two will bring benefits to both realities," stated the source stressing that talks on the merger were initiated even before ArcelorMittal showed an interest in acquiring the troubled Italian steelmaker Ilva.

Local market sources noted that ArcelorMittal has strengthened its presence in Italy since Ilva has been experiencing production problems.