Completed acquisition by Motorsports Vision Ltd of Brands Hatch Circuit Ltd & Brands Hatch Leisure Ltd

Affected market: Radio

No. ME/1631/04

Please note that the full text of the decision can be downloaded by using the link on the right of this page . What follows are extracts regarding the parties, the transaction, jurisdiction, assessment and the decision.

The OFT's decision on reference under section 22 (1) given on 24 May 2004.

PARTIES

MotorSport Vision Ltd (MSV) is a new company owned by Roadcoast Ltd, which also owns JPM Ltd. JPM trades as PalmerSport and Bedford Autodrome. It operates almost exclusively in the field of corporate event driving experience days.

Brands Hatch Circuits Ltd & Brands Hatch Leisure Ltd (BHCL) was formally part of Octagon Motorsports. In November of 2003 Octagon Motorsports split its five motor racing circuits in to Silverstone Motorsports Limited (Silverstone) and BHCL (Brands Hatch, Oulton Park, Cadwell Park and Snetterton). The UK turnover of the assets of BHCL bought by MSV was £18m in the year 2003.

TRANSACTION

MSV has purchased the four BHCL circuits; various vehicles; and On Track (a track day organiser (TDO)). The administrative deadline is May 24 2004 and the statutory deadline is 8 June 2004.

JURISDICTION

As a result of this transaction, MSV will supply over 25 per cent of track days for non-club members in the UK. The share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. A relevant merger situation has been created.

ASSESSMENT

The parties overlap in the supply of corporate participation days, the supply of track days to final consumers, and the upstream supply of track time for track days to TDOs. Shares of supply in the first two areas are very low and no customers have any concerns here. It is therefore not expected that any substantial lessening of competition has resulted or may be expected to result in these areas.

Shares of supply are somewhat higher in the upstream supply of track time for track days to TDOs, an area in which some customers raised concerns.  However, there are several reasons to believe that the merger has not resulted nor may be expected to result in a substantial lessening of competition.

First, post merger, the increment to MSV's share of the supply of track time to TDOs is around 1 per cent. Such a small increment would not appear to provide MSV with greater scope to raise prices than existed before the acquisition. Although there have been price rises, the reasons for them (substantial losses incurred and the necessity for substantial improvements) seem plausible.

Second, Bedford Autodrome is an unlicensed circuit. The CC report questioned the degree of competitive constraint that such circuits could exercise over licensed circuits, a view which is supported by evidence before the OFT (although some third parties did consider that Bedford Autodrome, unlike other unlicensed circuits, was nevertheless able to compete effectively with the BHCL circuits).

Third, the fact that Silverstone, a licensed circuit, was not part of the transaction and continues to compete means the merger may have created a more competitive environment. The significance of Silverstone is highlighted by the fact that its separation from Brands Hatch, Oulton Park, Cadwell Park and Snetterton largely allayed the concerns that the CC had about all five of these licensed circuits being under common control. Finally, most third parties were in agreement about the fact that this acquisition was a positive outcome for the BHCL circuits, as it was largely feared the circuits may have been acquired for non-motor sport usage.

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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