Completed acquisition by Otis Limited of Oakland Elevators Limited

Affected market: Lifts and elevators

No. ME/1409/03

Please note that the full text of the decision can be downloaded by using the link on the right of this page . What follows are extracts regarding the parties, the transaction, jurisdiction, third party views, assessment, and decision.

The OFT's decision on reference under section 22(1) given on 28 November 2003.

PARTIES

Otis Ltd (Otis) is active in the manufacture, upgrading, repair and maintenance of passenger and goods lifts and escalators. It is ultimately owned by United Technologies Corporation of the US and is a leading international supplier of lift and escalator equipment and services. In the year to 30 November 2001 Otis had a turnover of £235.2 million. Oakland Elevators Ltd (Oakland) is involved in the design, manufacture, installation, repair, service and refurbishment of elevators of all types. In the year to 30 September 2002 it had sales of £11.6 million.

TRANSACTION

This is a completed merger – Oakland was acquired on 30 September 2003 for a consideration of £7.7 million. The statutory deadline expires on 29 January 2004, the 40 day administrative deadline is 19 December 2003. Otis informed the Office that the main focus of the merger is on the maintenance sector – it will provide Otis with additional maintenance depots, particularly outside London, and enable it to offer a wider range of maintenance and service contracts and be more competitive when bidding for service contracts.

JURISDICTION

As a result of this transaction Otis and Oakland have ceased to be distinct. The parties overlap in the supply of new lifts; the refurbishment of installed lifts; and maintenance services. The share of supply test in section 23 of the Enterprise Act 2002 appears to be met in respect of the supply of new lifts and refurbishment services.  A relevant merger situation has therefore been created.

ASSESSMENT

Whilst Otis represents the largest lift manufacturer within the UK there are factors to suggest it is still subject to significant constraints. Most importantly, it appears that the strongest competitors to Otis are Kone, Schindler and Thyssen who are established multi-national lift suppliers who were all recognised by third parties. This constraint remains post-merger. There are also a number of mid-sized suppliers and many small players particularly in the maintenance sector. The increment arising from the merger in any sector is also very modest.

The sole specific concern raised by one third party relates to the supply of bespoke lifts. In this respect it does not appear that Otis represented a viable option now and thus it is debatable whether the acquisition could represent a substantial lessening of competition in the supply of this type of lift. Nevertheless there also appear to be other companies of a similar size to Oakland who offer bespoke lifts.

On this basis, the OFT does not believe that it is or may be the case that the creation of the relevant merger situation has resulted or may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom for goods or services.

DECISION

This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.

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