Affected market: Grocery wholesaling
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The OFT's decision on reference under section 22 given on 19 May 2005. Full text of decision published 2 June 2005.
Bestway (Holdings) Limited is primarily engaged in grocery wholesaling in the UK, with turnover [together with its sister company, Bestway Northern Limited] (see note 1) of around £1,047 million from this activity in the year to June 2003. The majority of this turnover derived from sales on a cash & carry basis, with about £100 million from delivered wholesale grocery sales. In this decision, the Bestway grocery wholesaling business is referred to as Bestway.
Batleys Limited is active in grocery wholesaling in the UK, with a strong presence in the north of England. The turnover of the Batleys UK grocery wholesaling business was £571.4 million in its 2004 financial year. The majority of this turnover derived from sales on a cash & carry basis, with about £25 million from delivered wholesale grocery sales. In this decision, the Batleys UK grocery wholesaling business is referred to as Batleys.
Bestway acquired the entire issued share capital of Batleys on 28 January 2005.
As a result of this transaction Bestway and Batleys have ceased to be distinct. The UK turnover of Batleys exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. A relevant merger situation has been created.
The merged entity is the fourth largest national grocery wholesaler in the UK, with a modest 9.9 per cent share of supply in grocery wholesaling as a whole and 15.9 per cent share of supply in cash & carry alone. The merged entity will continue to face competition from a number of other sizeable wholesalers.
At a local level, the parties have had a different geographic focus, giving rise to a limited number of local overlaps. Isochrone analysis of these overlaps shows that the parties will face competition from rival cash & carry outlets in all areas. Additionally, the ability of delivered wholesalers to supply customers on a national basis will provide a strong competitive constraint on the merged entity.
The overwhelming majority of third parties contacted by the OFT considered that the transaction did not raise competition concerns.
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.
This merger will therefore not be referred to the Competition Commission under section 22(1) of the Act.