Completed acquisition by Fishers Services Limited of assets of The Sunlight Service Group Limited

Affected market: Linen textile rental

No. ME/3633/08

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

The OFT's decision on reference under section 22(1) given on 13 June 2008. Full text of decision published 23 June 2008.

Please note that square brackets indicate figures or text which have been deleted or replaced at the request of the parties for reasons of commercial confidentiality.

PARTIES

Fishers Services Limited (Fishers) is a textile services company which offers linen rental, work wear hire, washroom hygiene services and laundry services from four plants in Scotland to the whole of Scotland and the north of England.

Sunlight Service Group Limited (Sunlight) is part of the Davis Service Group plc, a leading provider of textile and related services across Europe. The assets Fishers acquired from Sunlight in Scotland were used for textile services. The annual turnover of the acquired assets for 2008 is estimated at less than [ ] million.

TRANSACTION

The assets acquired by Fishers (Acquired Assets) include:

• Sunlight's interest in the leasehold of a storage depot in Inverness, where linen products that have been or are due to be laundered are stored
• rights under the contracts with Sunlight customers based in the north of Scotland, together with associated customer records, and
• 12 employees transferred by virtue of the Transfer of Undertakings (Protection of Employment) Regulations from Sunlight to Fishers. Five were subsequently made redundant by Fishers following a consultation exercise.

The OFT examined this merger as a result of an unsolicited complaint. The deal completed on 3 March 2008. The extended statutory deadline expires on 8 July 2008.

JURISDICTION

As a result of this transaction Fishers and the Acquired Assets - which the OFT considers to form an enterprise for the purposes of section 23(1) of the Enterprise Act 2002 (the Act) - have ceased to be distinct. The parties overlap in the supply of linen rental services and the share of supply test in section 23 of the Act is met in Scotland, which is a substantial part of the UK. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

THIRD PARTY VIEWS

Although this transaction was brought to the attention of the OFT as a result of a third party complaint, other third parties contacted by the OFT did not raise any competition concerns [  ]. Any negative comments raised by customers were related to problems with the linen supplied, for example late deliveries or wet linen, and were not merger specific.

The OFT considers that concerns expressed by the complainant about a lack of competition resulting from the transaction have not been endorsed by comments received from third parties. One competitor confirmed that his business had won a considerable amount of business from Fishers and was of the opinion that his business would continue to grow.

ASSESSMENT

The parties overlap in the supply of textile maintenance services in the north of Scotland. The transaction has resulted in a combined share of [31-36] per cent in the north of Scotland with an increment of [5-10] per cent. Substantial competition remains after the merger, and, despite the disincentives to entry identified by Fishers, the OFT considers that barriers to expansion are relatively low.

Apart from the original complainant that triggered the case [ ], customers were content with the level of competition in the market and considered that they were able to put pressure on prices by threatening to switch to other suppliers or by bringing textile maintenance services in house. Similarly, a competitor considered that it was able to compete with Fishers, and anticipated continuing to grow in the future. Any negative comments received related to matters which were not merger specific.

Consequently, taking account of all the evidence received, 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).

Back to top