Affected market: Grocery retailing/wholesaling
No. ME/1222/04
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 decision.
Please note that square brackets indicate figures replaced by a range at the request of Musgrave.
The OFT's decision on reference under section 22 given on 30 September 2004.
PARTIES
Musgrave Investment plc (Musgrave) is a wholly owned subsidiary of Musgrave Group plc, an Irish grocery and food wholesale distributor. Musgrave Group plc is active in the GB through Budgens' chain of 234 grocery stores. 65 of these are owned and operated by independent retailers supplied by Budgens. Budgens plans to extend this scheme to all its currently owned stores. Londis (Holdings) Limited (Londis) is a wholesale supplier, mostly of groceries, to 1,947 member grocery store operators. Some operators trade under the Londis fascia. Londis's UK turnover for the year to 30 January 2004 was £515.9m.
TRANSACTION
Musgrave acquired Londis by way of a scheme of arrangement on 23 July 2004. The administrative deadline is 30 September 2004 and the statutory deadline is 22 November 2004.
JURISDICTION
As a result of this transaction Musgrave and Londis have ceased to be distinct. The UK turnover of Londis 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
A number of potential competition concerns have been investigated; none give rise to a realistic prospect of a substantial lessening of competition. In particular, we have considered whether Musgrave would have the incentive to raise prices from Budgens stores in certain areas of overlap with Londis stores. On the evidence provided in this case, there would be appear to be no reasonable prospect of it having such incentives, as the margin data and the survey of actual and potential competition at the retail level indicate that such a strategy would not be profitable.
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 CC under section 22(1) of the Act.
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