Anticipated acquisition by Autoglass Limited of Nationwide Autoglazing Limited and Glasscare Limited

Affected market: Repair and replacement of vehicle glass

No. ME/2132/05

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

The OFT's Decision on reference under section 33 given on 25 January 2006. Full text published 24 February 2006.

Please note that square brackets indicate figures or text which have been deleted or replaiced with a range at the request of the parties for reasons of commercial confidentiality.

PARTIES

Autoglass Limited (Autoglass) is active in the repair and replacement of vehicle glass for all types of vehicles. Through a network of directly employed glass fitters, Autoglass operates at a national level throughout the UK.

Nationwide Autoglazing Limited (Nationwide) also offers repair and replacement of vehicle glass services. Nationwide does not employ glass fitters directly, but relies on a national network of independent glass fitters. Nationwide's UK turnover for the year ended December 2004 was £8m.

Glasscare Limited (Glasscare) is a small company set up by the owners of Nationwide. Glasscare operates a direct billing and claims management system called Supplier Invoice Control Programme (SICP), which manages aspects of the repair and replacement of vehicle glass process on behalf of independent glass fitters. Its UK turnover for the year ended April 2005 was £[ ].

TRANSACTION

Autoglass is proposing the acquisition of the entire issued share capital of Nationwide and Glasscare for a consideration of £[ ]. Autoglass originally submitted details of the acquisition to the OFT in the form of a merger notice on 29 November 2005. However the case is now being considered as an informal submission and the administrative target date for a decision is 27 January 2006.

JURISDICTION

As a result of this proposed transaction (to be conducted in the form of a single share purchase agreement), Autoglass, Nationwide and Glasscare would cease to be distinct. The share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met on the basis that the merged entity would supply more than 25 per cent (i.e. approximately [ ] per cent) of repair and replacement of vehicle glass services in the UK. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation between Autoglass, Nationwide and Glasscare.

ASSESSMENT

The parties overlap in the supply of repair and replacement of vehicle glass services in the UK.

It seems likely that Nationwide currently poses a degree of competitive constraint on Autoglass. A number of third parties have expressed concerns with regard to a loss of a significant competitor operating at national level in an already concentrated sector which would offer few post merger alternatives.

However, the available evidence also indicates the existence of several competitors who are of equivalent size and have sufficient geographical coverage to provide an alternative to Nationwide. The insurance companies who, acting as agents for their customers the motorists, account for the majority of purchases, enjoy substantial market power and incur low switching costs. There is also significant spare capacity amongst the parties' competitors.

Some third parties also raised concerns in relation to Autoglass's acquisition of Glasscare and its Supplier Invoice Control Program (SICP) system of facilitating transactions between insurance companies and glass fixing suppliers. However, the number of repair and replacement jobs invoiced through this system represents less than [<5 per cent] of the UK total. The OFT therefore considers that changes to the SICP system will not have any adverse impact on competition.

Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

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