Completed acquisition by Countrywide plc of Bradford & Bingley’s estate agency business and Securemove Property Services Ltd

Affected market: Estate agency and surveying services

No. ME/1280/04

Please note that the full text of the decision can be downloaded from 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 given on 23 November 2004

PARTIES

Countrywide plc (Countrywide) is engaged in the provision of a wide range of services in respect of residential property, including estate agency services, financial services, conveyancing, surveying and valuation. 

Bradford & Bingley plc (BB) provides lending on residential and commercial properties, retail savings services and the retailing of mortgage, investment and insurance products.  Prior to the acquisition BB also supplied residential estate agency and surveying services.  In the year ending 31 December 2003, the UK turnover of BB's estate agency and surveying businesses amounted to £134 million.

TRANSACTION

On 15 October 2004 Countrywide acquired the BB Estate Agents business (BBEA) and the entire issued share capital of BB's surveying and valuation services business, Securemove Property Services Ltd (Securemove) for a total consideration of £44.4 million.  The statutory deadline for consideration of this transaction expires on 14 February 2005 and the OFT's administrative deadline expires 23 November 2004.

JURISDICTION

As a result of this transaction Countrywide and BB have ceased to be distinct.  The UK turnover of the businesses acquired by Countrywide 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 the case that a relevant merger situation has been created.

ASSESSMENT

The transaction qualifies for consideration under the Act as it exceeds the turnover threshold in section 23(1)(b) of the Act. 

The parties overlap in the supply of estate agency services, and in surveying and valuation services, including panel management.  In estate agency services the parties have a low combined UK share of supply.  When looking at more localised areas where current competition may not be as prevalent, the OFT considers that the relatively low level of barriers to entry and expansion will act as an on-going constraint on the merged business.

In the provision of valuation services the parties combined share of supply in the UK is around 21 per cent (26 per cent if in-house surveyors are excluded) in a highly fragmented sector.  In addition to the competition which remains in the sector it is also noted that barriers to entry and expansion are modest.

In the provision of panel management services the parties combined share of supply in the UK is 22 per cent.  In this sector there are a number of examples of lenders switching their panel requirements to providers other than Countrywide and BB (Securemove) and there has been recent successful entry.  For both valuation / surveying and panel management no issues were identified at a local level concerning a lack of choice of provider following the acquisition.

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.

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