Affected market: Fire fighting products
No. ME/1574/04
Please note that the full text of the decision can be downloaded from 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 22 given on 15 March 2004.
PARTIES
Kidde Plc (Kidde) is active worldwide in the design, manufacture, sale and installation of fire and safety products and systems, including fire detection and fire fighting products and systems. In the financial year to 31 December 2002, Kidde's worldwide turnover was £879,644,000 with sales of £83,689,000 in the UK.
Croda Fire Fighting Chemicals (Croda) manufactures foam equipment systems and fire extinguishing agents in the UK and in France. In the financial year to 31 December 2002, Croda's worldwide turnover was £8,602,000 of which £1,193,000 was made in the UK.
TRANSACTION
Kidde has acquired Croda's manufacturing operations of fire extinguishing agents in Liverpool in the UK and in Lyon, France.
The transaction was notified by Kidde on 19 January 2004. The 40 working day administrative deadline is 15 March 2004. The merger was completed on 16 January 2004 and the statutory deadline is 15 May 2004.
JURISDICTION
As a result of this transaction Kidde and Croda have ceased to be distinct. The parties overlap in the supply of foam equipment systems, fire fighting powder (powder) and fire fighting foam (foam) and the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that a relevant merger situation has been created.
ASSESSMENT
The combined business is the largest supplier of powder and foam worldwide and in the UK. Although the merger appears to increase concentration in both sectors which may give rise to prima facie competition concerns, customers have indicated that they possess sufficient negotiating strength to resist price increases. The loss of a single large contract can significantly impact upon the parties' revenue and thus the threat of customers switching to one of a range of alternative global suppliers of both powder and foam can be expected to competitively constrain the parties' behaviour. Switching for PFE suppliers may incur some costs; however, these do not appear to represent a large proportion of their turnover.
Our investigation suggests that barriers to entry appear to be low with the possibility of chemical companies entering with relative ease. Existing suppliers could also expand production in the event of an increase in demand.
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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