Completed acquisition by British Salt Limited of New Cheshire Salt Works Ltd

Affected market: Salt

No. ME/1593/05

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, assessment, undertakings in lieu and decision.

The OFT's decision on reference under section 22(1) given on 26 May 2005. Full text of decision published 24 June 2005.

Please note square brackets indicate information excised or replaced by a range at the request of the parties for reasons of commercial confidentiality.

PARTIES

British Salt Limited (British Salt) is a wholly-owned subsidiary of British Salt Holdings LLC. British Salt is based in Middlewich, Cheshire and is active in the production and sale of vacuum salt products. 

New Cheshire Salt Works Limited (NCSW) is a family-owned business based in Northwich, Cheshire. NCSW is also active in the production and sale of vacuum salt products. In 2004, NCSW's UK turnover was [ ].

TRANSACTION

On 24 February 2005, British Salt acquired the entire issued share capital of NCSW. The administrative deadline in this case expires on 27 May 2005.

On 30 March 2005, the OFT accepted initial undertakings from British Salt and British Salt Holdings LLC pursuant to section 71 of the Enterprise Act 2002.

JURISDICTION

As a result of this transaction British Salt and NCSW have ceased to be distinct. The parties' combined UK shares of supply of each of Pure Dried Vacuum (PDV) salt and compacted salt exceed 25 per cent and the share of supply test in section 23 of the Act is therefore met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created. 

ASSESSMENT

The acquisition by British Salt of NCSW reduces from three to two the number of British producers of vacuum salt. The merger combines the first largest and third largest suppliers of PDV salt and the second and third suppliers of compacted salt. 

In view principally of the increased level of concentration and the homogenous nature of the products, the merger might lead to unilateral and/or coordinated effects, resulting in price increases for customers of PDV salt and compacted salt. Such price increases may however be unprofitable and/or unsustainable due to the threat of increased levels of imports from Continental Europe, but we have not been provided with sufficient evidence to demonstrate this proposition and the views of third parties in this respect are mixed.

If imports, or the threat of imports, are a sufficient constraint, this is most likely to be in relation to larger customers who are located close to ports. Smaller customers, and those who are not located close to import facilities, are more likely to be affected by price increases resulting from the merger. These include the customers mostly likely to have been capable of being supplied by NCSW before the merger and to have been the subject of competition between NCSW and other potential suppliers. It is not clear that distributors would have the incentive and ability to provide these customers with sufficient volumes of imported salt products to counteract the effect of the reduction in the number of national salt producers. 

Consequently, the OFT believes 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

UNDERTAKINGS IN LIEU

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DECISION

This merger will therefore be referred to the Competition Commission under section 22(1) of the Act.

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