Anticipated merger between Acco World Corporation and General Binding Corporation

Affected market: Stationery products

No. ME/1683/05

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 33 given on 4 July 2005. Full text of decision published 15 July 2005.

PARTIES

Acco World Corporation (Acco) is a subsidiary of Fortune Brands, Inc. (Fortune Brands) which is incorporated in the US. In the UK, Acco supplies office equipment including binding and laminating products and consumables, shredders, boards and easels under various brands.

GBC Corporation (GBC) is a US company which produces punch and bind equipment and related supplies. Its UK turnover for the year ending 31 December 2004 was [less than £70 million].

TRANSACTION

Fortune Brands, Acco and GBC have agreed that, firstly, Fortune Brands will spin off Acco and its worldwide subsidiaries to Fortune Brand's stockholders, by distributing all outstanding shares of common stock of Acco World Corporation owned by Fortune Brands to Fortune Brand's stockholders on a pro rata basis. Second, and immediately following such distribution, Acco and GBC will merge in a stock-for stock merger of a wholly-owned subsidiary of Acco with and into GBC, with GBC surviving as a wholly-owned subsidiary of Acco. The merger company will be called Acco Brands. GBC shareholders will receive one Acco Brands share in exchange for each GBC share they hold. Upon closing of the transaction, Fortune Brands' shareholder will own approximately 66 per cent of Acco Brands Corporation and GBC's shareholders will own approximately 34 per cent.

The transaction has also been notified in the USA, Germany and Spain. The administrative deadline for announcement of the OFT's decision in this case expires on 6 July 2005.

JURISDICTION

As a result of this transaction, Acco and GBC will cease to be distinct. The parties overlap in the supply of binding equipment and consumables, laminating equipment and consumables, boards and easels, and shredders, with a share of supply of 30 to 60 per cent (depending on the product). Therefore, the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. 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.

THIRD PARTY VIEWS

The majority of third parties were not concerned.

ASSESSMENT

Post-transaction, the merged entity would be the largest UK supplier of binding equipment and consumables, laminating equipment and consumables, document shredders and boards and easels.

However, several large competitors and a fringe of smaller competitors will remain post-merger and recent entry indicates that barriers to entry are not insurmountable. There currently appears to be excess capacity in this industry and prices have generally decreased in recent years, as a result of the relocation of the production to the Far East.

While branding appears to be relevant to some extent, especially for the commercial segment, the majority of third parties contacted confirmed that they would switch suppliers if prices increased. In any event, customers could source directly from manufacturers and Acco itself is not present in the commercial sector.

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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