FRANKFURT (Reuters) - Thyssenkrupp Steel (>> ThyssenKrupp) and Tata Steel's (>> Tata Steel Limited) plans to merge in Europe could enable them not just to cut costs but also raise prices, customers and shareholders say.

The planned joint venture, announced on Wednesday, would create Europe's second-largest steel maker, with a market share of about 13 percent, according to data from the companies and the World Steel Association.(For a graphic on Global steel production click http://tmsnrt.rs/2xRzVMY)

This would make the group, to be named Thyssenkrupp Tata Steel, a distant second to global leader ArcelorMittal (>> ArcelorMittal), which has a 26 percent share.

Although Thyssenkrupp Steel Europe and Tata Steel Europe say their client groups are largely complementary, they have significant overlap in the autos industry, their largest market, company data shows.

Below are some details on pricing and the joint venture's potential client structure.

PRICING POWER

European steel prices, even though volatile and under continued pressure from cheap Chinese imports, have recently stabilised, providing the day-to-day business.(For a graphic on European steel prices click http://reut.rs/2jQClVN)

Currently at 530 euros per tonne, European steel prices are still down by about a third compared with their pre-financial crisis peak, but have risen by nearly two-thirds since their most recent record at the end of 2015.

They are down about 3 percent in the year-to-date and investors reckon that the further consolidation could support a recovery.

"An oligopoly has a different power to set prices than a more fragmented market," said Thomas Vorlaufer, fund manager at Deka Investment, Thyssenkrupp's 10th-largest shareholder. "As a result there can be an impact on prices."

Higher prices would mostly hit the automotive industry, which would account for about 40 percent of sales of the combined entity.

German luxury carmaker BMW (>> Bayerische Motoren Werke), a customer of Thyssenkrupp Steel Europe, Tata Steel Europe and ArcelorMittal, fears that the merger could change things for the worse.

"We have a critical view and are concerned over whether the steel market will still function efficiently following a merger," a spokesman for the company said.

A spokesman for Peugeot (>> Peugeot), which gets deliveries from Tata Steel Europe, said he did not expect any impact on prices. Volkswagen (>> Volkswagen) and Daimler (>> Daimler), also clients of Thyssenkrupp Steel Europe, declined to comment.

SOME OVERLAP

"Our businesses and those of Tata complement each other well," Thyssenkrupp said on Wednesday, adding that while it was stronger in the automotive sector, Tata Steel Europe had a bigger exposure to industrial customers.

However, automotive is big business for both groups.

Thyssenkrupp Steel Europe makes 46 percent of its sales, or 3.51 billion euros (£3.11 billion), from clients in the automotive industry. At Tata Steel Europe, whose customers also include Tata Motors' (>> Tata Motors Limited) Jaguar Land Rover, that share is 32 percent, or 166.67 billion Indian rupees ($2.57 billion).

There is less overlap in other areas, most notably in manufacturing goods, which accounts for 32 percent of revenues at Tata Steel Europe, and includes business with clients in the engineering sector. Engineering accounts for just 4 percent of sales at Thyssenkrupp Steel Europe.

The companies say that overlap will not be much of an issue as the proposed joint venture will have three major production sites spread across Europe, enabling it to cover different regions which in turn reduces shipment costs.

Thyssenkrupp's Duisburg plant, for example, sells two-thirds of the steel it produces within a radius of 500 kilometres (311 miles). With annual output of about 12 million tonnes of steel, it would be the joint venture's biggest plant.

Tata Steel Europe's Ijmuiden plant in the Netherlands, which supplies steel to the packaging sector, ranks second, with 6.9 million tonnes produced in the last financial year.

Meanwhile Port Talbot, Britain's largest steel production site, produced 3.6 million tonnes of liquid steel. Tata Steel earlier this year made commitments to safeguard jobs and investments at the plant for five years in return for an overhaul of its pension scheme.

(Reporting by Christoph Steitz and Georgina Prodhan in Frankfurt, Maytaal Angel in London, Andreas Cremer in Berlin, Tom Kaeckenhoff in Duesseldorf and Laurence Frost in Paris; Editing by Greg Mahlich)