Completed acquisition by SIG plc of Orion Trent Holdings Ltd

Affected market: distribution of construction material

No. ME/1282/04

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 square brackets indicate figures replaced by a range at the request of the parties

The OFT's decision on reference under section 22 given on 11 November 2004

PARTIES

SIG Group (SIG) is a European specialist distributor of construction materials such as insulation, dry lining, fire protection, roofing and ceiling products as well as petrochemicals and offshore manufacturing industries.

Orion Trent Holdings Ltd (Orion) is a specialist distributor of insulation, fire protection and dry lining materials and a wide range of ancillary and related products.  Its UK turnover for the year ending 12 December 2003 was £28.3 million.

TRANSACTION

On 4 September 2004 SIG acquired the entire issued share capital of Orion.  The transaction was made public on 8 September 2004 and the statutory deadline therefore expires on 7 January 2005.  The administrative deadline expires 11 November 2004.

JURISDICTION

As a result of this transaction SIG and Orion have ceased to be distinct.  The parties overlap in the distribution of construction materials and the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met in respect of the distribution of structural insulation products in the United Kingdom (the UK).   The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

ASSESSMENT

The parties overlap in the distribution of structural insulation products (both to contractors and GBMs), fire protection products and dry lining materials. 

Post-merger the parties account for [15-25] per cent (increment [less than 5] per cent) in fire protection and for [15-25] per cent (increment [less than 5] per cent) in dry lining.  The parties submitted and third parties confirmed that a number of alternative competitors exist and no concerns were raised in relation to these products.

In the supply of structural insulation products to contractors, the OFT's investigation shows purchasers generally unconcerned and believing that viable alternative sources of supply remain.  In the supply of structural insulation products to GBMs, manufacturers' direct supply is a significant constraint on the parties, moreover, in both sectors of supply (to contractors and GBMs) the merged entity will continue to face significant competition from other specialist insulation distributors, and barriers to entry are low. 

On the basis of the above, the OFT therefore believes that post merger sufficient competitive constraints will remain on the parties to prevent price increases and/or a reduction in service or quality in the supply of structural insulation products, fire protection products and dry lining materials.  Regarding the creeping acquisition comment made by some third parties, the OFT notes that further acquisitions in the sector would need to be carefully considered to ensure a similar level of constraint remains.

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.

Back to top