Anticipated acquisition by Barratt Developments plc of Wilson Bowden plc

Affected market: Building of new houses and commercial property development

No. ME/2920/07

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 33(1) given on 13 April 2007. Full text of decision published 24 April 2007.

Please note that square brackets indicate text or figures which have been deleted or replaced with a range at the request of the parties and third parties for reasons of commercial confidentiality.

PARTIES

Barratt Developments plc (Barratt), with 33 operating divisions, is one of the largest residential house building groups in the UK. It is also active - albeit to a minor extent - in the development of commercial property.

Wilson Bowden plc (Wilson Bowden) is also a major residential house building group. However, a significant proportion of Wilson Bowden's total operations is attributable to commercial property development. In the year ended 31 December 2005, Wilson Bowden's turnover in the UK amounted to approximately £1,231 million.

TRANSACTION

Barratt is proposing to acquire the entire issued share capital of Wilson Bowden. The anticipated transaction was notified to the OFT on 1 March 2007. The administrative target date for the OFT's decision is 30 April 2007. 

JURISDICTION

As a result of the proposed transaction, Barratt and Wilson Bowden will cease to be distinct. Wilson Bowden's UK turnover exceeds £70 million, and the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is consequently 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.

THIRD PARTY VIEWS

The majority of third parties responded with no concerns. Only one respondent expressed concerns regarding the merger - however, the OFT does not consider that these concerns amounted to a body of evidence for the merger leading to a substantial lessening of competition.

ASSESSMENT

The parties overlap in the construction of new residential housing and in the development of commercial property in the UK.

With regard to new housing construction, the available evidence indicates that some competitive constraint is exerted between new and older housing. However, there is no need to reach any conclusion as to the precise scope of the product and geographic market since, on the basis of a cautiously narrow frame of reference (the supply of new housing at the regional level) the OFT believes that the proposed merger raises no competition concerns. Shares of supply are moderate, constraint is posed by a considerable number of alternative suppliers, barriers to entry and expansion are low and third parties were generally unconcerned.

Similarly, in the commercial property development sector, the available evidence indicates that existing commercial property and newly developed commercial property exert some competitive constraint. However, there is no need to reach any conclusion on the exact scope of the product and geographic market since, on the basis of a cautiously narrow frame of reference (the supply of commercial property development at the regional level) the OFT believes that the proposed merger raises no competition concerns. At the national level, combined shares of supply amount to [less than 5 per cent] on the basis of conservative estimates. Barratt has only very limited activities in commercial property and the increment in market share is [less than two per cent].

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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