Affected market: Financial services
No. ME/1456/03
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 12 December 2003
PARTIES
Barclays Bank plc (Barclays) is part of the Barclays plc group, one of the UK's largest financial services groups, and is engaged primarily in banking, investment banking and investment management. In the year to end December 2002, the Barclays group reported a UK turnover of £14.6 billion. Gerrard Management Services Ltd (Gerrard) is active in the provision of wealth management services to private clients focusing mainly on managed portfolio and 'dealing with advice' services. Gerrard is wholly owned by Old Mutual plc via subsidiary Central Capital Acquisitions Ltd. In the year to end December 2002, the UK turnover of the total business being acquired was £112.2 million.
TRANSACTION
Barclays Bank plc has agreed to acquire the private client wealth management business of Old Mutual plc for a consideration of £210 million subject to regulatory approval from the OFT and Financial Services Authority (FSA). The transaction comprises an acquisition of 100 per cent of the issued share capital of Gerrard Management Services Ltd once Old Mutual has transferred all its private client wealth management businesses into Gerrard Management Services.
This is an anticipated transaction. It was announced on 27 October 2003. The merger was notified on 5 November 2003 and the 30 day statutory deadline is 16 December 2003.
JURISDICTION
As a result of this transaction Barclays and Gerrard will cease to be distinct. The UK turnover of Gerrard exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. A relevant merger situation is likely to be created.
ASSESSMENT
The degree of fragmentation indicated by the existence of a large number of other operators in this sector, coupled with the lack of economies of scale, indicates that the parties' combined share of supply of 9.9 per cent is unlikely to raise any significant competition concerns with respect to wealth management services.
In respect of execution-only services, Barclays' low increment to share coupled with low barriers to entry indicate that there is little prospect of a substantial lessening of competition.
The OFT does not believe that it is or may be the case that the creation of the relevant merger situation 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 33(1) of the Act.
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