Completed acquisition by CRP Holdings Ltd of Balmoral Group International Inc

No. ME/1059/03

A report under section 125(4) Fair Trading Act 1973 on advice given on 19 May 2003 to the Secretary of State for Trade and Industry under section 76 of the Act

Please note that the full text of the advice can be downloaded from the bottom of this page. What follows are extracts from the advice regarding the jurisdiction, the parties, the relevant markets and the conclusion.

Jurisdiction

The merger satisfies the share of supply test of the FTA in respect of the supply of subsea buoyancy products in the UK.

The parties

Broomco (3054) Limited was set up to act as a holding company for CRP Holdings Limited and its subsidiaries, and the acquired Balmoral assets. CRP Holdings Limited's subsidiary, CRP Group Limited (CRP), manufactures a range of composite components for the offshore oil and gas industry, marine safety equipment, plastic moulding and polymer engineering and the design and supply of specialist equipment for the protection of offshore cables and pipes. The composites business of Balmoral Group Limited (Balmoral) is active in the manufacture of a range of surface and subsurface buoyancy systems, pipeline installation systems and elastomer products.

Relevant Markets

The parties overlap in the supply of moulded products for marine use.  [75-85 per cent]  of the parties' products are purchased by customers in the oil and gas industry by competitive tender. There are two product areas in which the parties' combined shares of supply may raise competition concerns: engineered mouldings in the form of static bend restrictors and stiffeners; and subsea buoyancy products for production risers and for drilling risers.

Conclusion

The merger qualifies for investigation under the share of supply test of the FTA. The parties overlap in the supply of moulded products for marine use. The geographic market is considered to be North America and Europe.

This merger is unlikely to raise significant competition concerns in respect of static bending stiffeners and restrictors given the parties' low increment to share and the presence of six other suppliers.

As regards buoyancy products for production and drilling risers, the merger will result in the loss of one bidder for buoyancy contracts in the UK. However, it seems likely that, where possible, customers will continue to seek alternative bids from steel tank suppliers, suppliers of syntactic foam buoyancy elsewhere in Europe and North America, and in other syntactic foam buoyancy segments. Moreover, customers have the ability, and indeed the incentive, to devise solutions themselves and to assist entry if prices rise post-merger. On balance, therefore, this merger is judged to be unlikely to raise a significant prospect that it will lessen competition substantially

The OFT therefore concludes and recommends that you should not refer this merger to the Competition Commission.

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