Completed acquisition by Alexander Dennis Limited of Transbus Ltd

Affected market: Bus construction

No. ME/1155/04

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.

Please note square brackets indicate figures either removed or replaced by a range at the request of the parties'

The OFT's Decision on reference under section 22 of the Enterprise Act 2002 given on 23 September 2004

PARTIES

Transbus International Ltd (Transbus), a supplier of bus bodywork and chassis was bought out of administration by Alexander Dennis Ltd (ADL), a company originally set up as a bid vehicle for the purpose of the acquisition, ADL only acquired the bus body and chassis business of Transbus and not the coach body and related aftermarket activities. The annual UK turnover of the acquired business is estimated by ADL to be [>£70million]. Stagecoach Group plc is an international transportation group, covering bus, train, tram, coach, taxi and ferry operations.

TRANSACTION

On 21 May 2004, ADL acquired Transbus. Two of the parties to the bid vehicle, Brian Souter and Ann Gloag have a shareholding which gives them a material influence over ADL. Both these investors already have material influence over Stagecoach. The extended statutory deadline expires on 23 September 2004 and the transaction was notified to the OFT on 9 August 2004 with the administrative deadline falling after the statutory deadline.

JURISDICTION

As a result of this transaction Transbus and Stagecoach have ceased to be distinct since the shareholding in ADL grants Brian Souter and Ann Gloag (who have material influence over Stagecoach) the ability materially to influence the policy of Transbus (now trading as ADL). The UK turnover of Transbus exceeds £70 million, so the turnover test in section 23(1) (b) of the Enterprise Act 2002 (the Act) is satisfied. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

ASSESSMENT

The investment by Brian Souter and Ann Gloag, as part of a consortium of investors, in ADL means that the largest UK manufacturer of buses now shares common ownership with Stagecoach, one of ADL's largest customers and the third largest UK bus operator. The potential competition concern raised is whether Stagecoach could attempt to foreclose competition in the downstream bus market by raising its competitors' costs in relation to bus or spare parts purchases. Among other factors discussed above, the presence of strong competitors to ADL in the supply of both bus body and chassis manufacturing to UK customers suggests that ADL would not realistically be able to impact significantly on competition between the bus operators. ADL does not, according to any of its customers or competitors, possess any unique products which cannot be replicated from other sources.

Consequently, the OFT does not believe that it is or may be the case that the merger has resulted or 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 22(1) of the Act.

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