An abandoned joint venture that that would have seen a Cumbrian quarry and kilns become part of a new European steel producing giant has been formally blocked by the European Commission.

Tata Steel and German multinational thyssenkrupp AG announced in May that it was walking away from its planned joint venture in anticipation of the decision by the EC. 

The 50-50 deal would have seen Tata Steel’s limestone quarry and lime kiln operations at Shap, and its 35-strong workforce, move into a newly-formed company, thyssenkrupp Tata Steel.

The EC said the merger would have reduced competition and increased prices for different types of steel. It added that neither Tata Steel or thyssenkrupp had offered “adequate remedies to address these concerns”.

Commissioner Margrethe Vestager, who heads up the EC’s competition policy, said: “Steel is a crucial input for many things we use in our everyday life, such as canned food and cars. 

“Millions of people in Europe work in these sectors and companies depend on competitive steel prices to sell on a global level. 

“Without remedies addressing our serious competition concerns, the merger between Tata Steel and thyssenkrupp would have resulted in higher prices. So, we prohibited the merger to avoid serious harm to European industrial customers and consumers.”

The decision, made under European Union Merger Regulation, followed an in-depth investigation by the EC into a move that would have seen the second largest producer of flat carbon steel in the European Economic Area, thyssenkrupp, and Tata Steel, the third, combine.

The site at Shap is part of Tata Steel’s strip products arm and supplies products to the giant’s operations at Port Talbot, in Wales, Ijmuiden, in the Netherlands and Duisburg, in Germany.

in-Cumbria understood that the joint venture had the potential to bring in more customers for the site – a distinctive landmark off the M6 at junction 39 which has been in operation since 1962 – by becoming part of a wider portfolio.

In response to the collapse of the joint venture last month, Tata Steel's executive director Koushik Chatterjee, said the company would “go back to the drawing board and look at more options”.

Joining forces with thyssenkrupp, he said, was “one of the fundamental strategies of going ahead in the deal was to create a more sustainable business”.

In response, unions demanded that Tata Steel gave its workers assurances about the future after a tumultuous few years for the company’s operations in Cumbria and the UK.

The operation at Shap had been placed up for sale along with all of Tata Steel’s UK operations in early 2016, however in-Cumbria learned that the site was quietly taken off the market when deals were struck for its long products and speciality steels arms.

Tata Steel did sell its Workington plant to Greybull Capital for £1 in 2016, saving 225 jobs. The site currently trades under the name TSP Engineering as a subsidiary of British Steel.

British Steel itself collapsed into liquidation last month, although Cumbria Chamber of Commerce chief executive Rob Johnston moved quickly to quell fears the site at Derwent Howe was at risk along with others sites and facilities including Scunthorpe Steelworks and at Teesside.

“We’ve spoken to TSP and it’s very much business as usual,” Mr Johnston said at the time, after attempts for a response from the company itself proved fruitless.

"The official receiver is looking to sell British Steel as an entity but, if that fails, is likely to dispose of TSP Engineering separately to help pay the parent company’s debts,” he added.