OFT accepts sale of 23 stores in builder’s merchants merger

31/12 17 April 2012

The OFT has today accepted undertakings offered by the Saint-Gobain group (the owners of Jewson) to address the competition concerns arising from its completed acquisition of Build Center. As a result, the merger will not be referred to the Competition Commission.

The undertakings require Jewson to sell 23 builder's merchant stores in 22 local areas to resolve the competition concerns identified by the OFT during its investigation into the merger.

Under the terms of the undertakings, the OFT must approve purchasers before they can buy any of the stores. The OFT will carefully assess the suitability of purchasers in each local area to ensure that they are capable of providing sufficient competition to the merged Jewson and Build Center business and other builders merchants in the area.

Ali Nikpay, Senior Director at the OFT and Decision Maker in this case, said:

'The OFT was concerned that builders and other tradesmen would see an increase in prices for building materials as a result of this merger in a number of local areas. We are satisfied that the divestments offered by Jewson will remedy these concerns and restore pre-merger competition.'

NOTES

Download a copy of the undertakings (pdf 103kb).
The transaction initially qualified for review by the European Commission but it was referred to the OFT by virtue of the Article 4(4) procedure under the European Merger Regulation because the OFT was considered to be the best placed competition authority to review it. This procedure enabled the OFT to analyse local issues as part of its assessment.
The Reference Test - The OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that a relevant merger situation has been created; and the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.
The OFT publicly consulted on the proposed undertakings, stating that it considered them appropriate to remedy the competition concerns it had identified. It did not receive any representations and therefore concluded that the undertakings are indeed appropriate.
The text of this decision will be placed in the mergers section as soon as is reasonably practicable.

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