Proposed acquisition by Iron Mountain Europe of assets of Hays plc, namely Hays IMS

No. ME/1185/03

A report under section 125(4) Fair Trading Act 1973 on the advice given on 30 June 2003 to the Secretary of State for Trade and Industry under section 76 of the Act

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

JURISDICTION

The merger satisfies the assets test of the FTA.  It also satisfies the share of supply test in respect of the supply of records management services (RMS) in the UK. The ECMR does not apply. 

THE PARTIES

Hays IMS is an operating division of Hays Commercial Services Limited, itself part of Hays plc (Hays), which provides record and information management services (RIMS) for paper and electronic media and associated services in the UK and overseas.  Hays IMS's gross worldwide assets as at 31 December 2002 were valued at [£70 million+] (see note 1).  Its UK turnover in the year ended 30 June 2002 was [ ] (see note 1). 

Iron Mountain Europe (Iron Mountain) is a joint venture between Iron Mountain Incorporated (50.1 per cent) and Mentmore plc (49.9 per cent), providing RIMS for a large number and variety of corporate and business customers, government and other institutions in the UK and Europe.  Iron Mountain Inc. is a global provider of RIMS with total 2002 worldwide turnover of $1.32 billion.  Iron Mountain's 2002 UK turnover was £46.9 million and its 2002 UK operating profit £3.4 million.  Mentmore provides space management, personal storage and business services in the UK and Europe and achieved total 2002 turnover of £77.4 million.

CONCLUSION

This prospective merger arises from the decision of Hays to sell Hays IMS though a bidding process: Iron Mountain is a bidder.  The merger appears to raise no material concerns in the bidding for smaller RMS contracts where there appears to be a wide range of potential providers.  In the supply of RMS for large volume and/or national contracts, the potential loss of rivalry in moving from three to two 'national' players (or four to three if Recall is considered a 'national' player) raises, on the face of it, potential competition concerns.  However, some of the larger customers seem unconcerned about the merger believing there would be sufficient choice of supplier post-merger.  While analysis of bidding information on the largest contracts confirms that the parties won most (18 out of 30) it also suggests an active pool of other bidders able to win even these larger contracts.  Fragmentation of larger contracts may be an option to some customers, so increasing their supplier options.  While barriers to entry into the supply of large volume/national RMS do not appear to be negligible, some smaller providers have expanded into this segment.  Aberdeen, which may be distinct from the wider RMS sector, may be different in this respect but here the customers are significant companies and could sponsor new entry or expansion by smaller providers if they were concerned.  Moreover, record management is an in-house activity for numerous businesses throughout the economy and may be a real option for many customers.

On balance, therefore, we conclude and recommend that you should not refer this merger to the CC.

NOTES

1. Actual figures replaced by a range at the request of the parties.

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