Completed acquisition by Armstrong Pumps Ltd of Howard Anderson Ltd

Affected market: Heating, ventilation and air-conditioning pumps

No. ME/1638/04

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, assessment and decision.

The OFT's decision on reference under section 22(1) given on 2 June 2004.

PARTIES

Armstrong Pumps Ltd (Armstrong) is based in Toronto and manufactures fluid movement equipment, principally pumps and associated pumping systems, for the building services industry world-wide. Armstrong's key products are fire pumps, pressurisation units, and commercial pumps. Howard Anderson Ltd (HAL) is based in the UK and was said to have been on the verge of imminent insolvency prior to the acquisition. HAL traded under the brands Holden Brooke and Pullen. HAL's turnover was approximately £20 million.

TRANSACTION

Armstrong Pumps acquired HAL on 2 February 2004. The extended statutory deadline is 16 June 2004 and the administrative timetable expires on 3 June 2004.

JURISDICTION

As a result of this transaction Armstrong and HAL have ceased to be distinct. The parties overlap in the supply of HVAC pumps and 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

Before the merger, the parties overlapped in the supply of HVAC pumps, specifically the manufacture of commercial, made-to-order HVAC pumps. The merger gives Armstrong a combined share of [20-30 per cent] (see note 1) of all commercial HVAC pumps in the UK [30-40 per cent] (see note 1) of the made-to-order segment alone.

Mixed views have been put forward on barriers to entry. There have been no recent examples of entry. However, most third parties agree that there would not be any technical difficulties in entering the commercial HVAC pumps segment. The easiest way to enter would appear to be through buying an existing pumps manufacturer in the Far East, and importing the pumps to the UK. Customers suggested that whilst they would not simply switch for the sake of trying something new, should they be faced with price increases, they would be willing to switch suppliers.

There appears to be a degree of countervailing buyer power amongst engineers and distributors. Many customers commented that their size provides them with power to negotiate on prices. Although the merger has resulted in the loss of one supplier, customers still have a choice of at least five others.

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.

NOTES

1. Figures replaced by a range at the request of the parties.

Back to top