Anticipated acquisition by 3i Group plc of Shearings Group Holdings Ltd

Affected market: Transport

No. ME/1401/04

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 33 given on 16 March 2005.  Full text of decision published on 24 March 2005.

PARTIES

Shearings Group Holdings Ltd (Shearings) provides coach touring holidays to the UK, Europe and a number of long haul destinations as well as self drive holidays throughout the UK. It also owns 36 hotels throughout the UK.

3i Group plc (3i) is a venture capital company listed on the London Stock Exchange. 3i holds a 82.32 per cent stake in Coach Holiday Group Ltd and a 37.5 per cent stake in Leger Holidays Ltd (Leger).

Coach Holiday Group Ltd (CHG) consists of three businesses:

• Wallace Arnold (WA), which provides coach touring holidays in the UK,  Europe and to long haul destinations, and owns 20 travel agency shops and 9 hotels throughout the UK
• National Holidays (NH), which provides coach touring holidays in the UK and Europe to customers in Tyne Tees, Teeside, Hull, Yorkshire and Manchester, and
• Caledonian Travel (CT), which also provides coach touring holidays in the UK and Europe but only to customers in Scotland.

TRANSACTION

3i proposes to bring Shearings and CHG under common management by forming a new entity, Newco, which will acquire Shearings and CHG. The statutory deadline expires on 16 March 2005.

JURISDICTION

As a result of this transaction, CHG, Leger and Shearings will cease to be distinct and will be controlled by 3i. The UK turnover of Shearings exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 is satisfied. The OFT therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation. 

ASSESSMENT

The OFT's investigation has focused on the merger's impact on coach touring holidays in the UK, a highly fragmented sector with over 1000 operators. Post transaction, the merged entity will supply 9.4 per cent of UK coach holidays (packaged, by turnover) and 14.4 per cent by passengers. The only regions where the parties will hold a share of supply over 25 per cent are in the North East and Yorkshire, and then only on a volume rather than value basis. Post transaction, the merged entity will in all regions continue to face existing competition from numerous alternative operators offering differentiated services that compete on a value for money (service and price) basis. In addition, expansion or entry by rivals appears to a further source of competitive pressure. Together these factors appear to continue to provide an effective constraint on the merged entity.

Consequently, the OFT does not believe that it is or may be the case that the merger 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 33(1) of the Act.

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