Completed acquisition by Balfour Beatty plc of Cowlin Group Limited

Affected market: Construction

No. ME/3265/07

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 22(1) given on 12 October 2007. Full text of decision published 17 October 2007.

PARTIES

Balfour Beatty plc (Balfour Beatty) is a holding company for the Balfour Beatty group of companies. Its main areas of business are: civil and specialist engineering; building and building management; rail engineering; and investments and developments. [see note 1] The parties to this merger overlap in new construction. The relevant Balfour Beatty companies active in this area are Balfour Beatty Construction Limited (BBCL) and Mansell plc (Mansell). BBCL undertakes large scale construction projects (usually contracts worth over £20 million) whereas Mansell's housing and general building work is focused on smaller contracts (worth less than £20 million).

Cowlin Group Limited (Cowlin) is a construction company active in the South East and South West of England as well as in Wales. It constructs buildings across a range of sectors including commercial, industrial, residential, education and health. It focuses on smaller value contracts (less than £20 million). Last year, Cowlin's UK turnover was around £186 million. [see note 2] 

TRANSACTION

On 29 August 2007, Balfour Beatty acquired a controlling interest in Cowlin.

The statutory deadline for the Office of Fair Trading (OFT) to announce a decision in this case is 28 December 2007 and the OFT's administrative target is 13 November 2007.

JURISDICTION

As a result of this transaction Balfour Beatty and Cowlin have ceased to be distinct. The UK turnover of Cowlin exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied.

The parties' turnover exceeds the levels set out in Article 1(2) of the EC Merger Regulation. However, since both parties achieve more than two thirds of their turnover in the UK the merger does not have a Community dimension.

The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

THIRD PARTY VIEWS

Almost all third parties were unconcerned about the merger. One customer was concerned that the merger would lead to a culture change within Cowlin which may lead to a different relationship with the merged entity. Another was concerned that working with a much larger company would mean that it would face a change in its financial risks. Neither of these concerns raise competition issues.

ASSESSMENT

The merged entity has very low shares of supply in all segments on national and regional bases. It will continue to face competition from a number of well established construction companies at national and regional levels.

Almost all customers are unconcerned about the merger and no competition concerns were raised.

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. Balfour Beatty invests in privately funded infrastructure projects.
2. For the year ending 30 September 2006.

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