Affected market: Asset Management
No. ME/1176/04
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.
The OFT's decision on reference under section 33 given on 19 August 2004.
PARTIES
ISIS Asset Management plc (ISIS) is a listed investment management business. It provides asset management services to financial services group, Friends Provident plc (its majority shareholder), and other external institutional and private investors. For the financial year ending 31 December 2003, the UK turnover of ISIS was £111 million.
Foreign & Colonial Group (Holdings) Limited (F&CG) is a pan-European asset management group which provides a range of investment and advisory services to private and institutional investors, in addition to insurance funds, in the UK and Europe. It is a wholly owned subsidiary of the Dutch financial services group, Eureko B.V. For the financial year ending 31 December 2003, the UK turnover of F&CG was £85.6 million.
TRANSACTION
ISIS and F&CG announced on 2 July 2004 that they have entered into an agreement to merge their businesses conditional on, inter alia, the receipt of regulatory consents.
The merger was notified on 8 July 2004 and the 30 day statutory deadline is 19 August 2004.
JURISDICTION
As a result of this transaction ISIS and F&CG will cease to be distinct. The UK turnover of F&CG 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 arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.
ASSESSMENT
The parties overlap in the provision of asset management services. For the purposes of this assessment, the impact of this anticipated transaction has been considered in relation to institutional and retail asset management segments, in addition to different asset classes for which the parties overlap, within the UK.
The combined share of supply in the UK of the merged entity will be less than 10 per cent, and the increment negligible, on even the narrowest frames of reference under consideration.
A number of factors lend to the conclusion that a high degree of competition exists in this sector. The asset management services sector is highly fragmented, as indicated by the existence of a large number of other operators in this sector at every geographical level, including the UK. The nature of the sector is international in scope. Barriers to entry and expansion appear to be low in respect of existing financial services companies. Finally, there may exist a degree of countervailing buyer power in institutional asset management.
Consequently, the OFT does not believe that it is or may be the case that the merger 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 33(1) of the Act.
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