EU clears Arsenal Capital plan to buy DSM unit

BRUSSELS, Jan 9 (Reuters) - Arsenal Capital Partners, a U.S. private equity firm, won permission from EU competition authorities on Friday to buy the special products business of Dutch chemicals group Royal DSM (DSMN.AS), subject to conditions.

The European Commission, which polices competition in the 27-nation European Union, said Arsenal Capital had agreed to divest the whole of its liquid and solid benzoic acid production, as well as sodium benzoate production in Europe.

The Commission in August opened an in-depth investigation into the proposed deal, saying the merged firm might acquire an excessive share on the benzoic acid and sodium benzoate market.

Arsenal controls Velsicol Chemical Corp, which produces those two basic inputs for the food and drink industry.

The merged entity would have controlled the only two production plants in Europe.

The firm offered to divest the Velsicol production plant in Estonia and therefore its entire solid and liquid benzoic acid production, the Commission said.

"Without strong remedies, the planned acquisition would have led to a quasi-monopoly and to a serious risk that consumers would be worse off," EU Competition Commissioner Neelie Kroes said in a statement.

"In the light of the divestments offered, I am now satisfied that effective competition will be ensured," she said. (Reporting by Bate Felix, editing by Dale Hudson)