Anticipated acquisition by Musgrave Investments plc of J & J Haslett Holdings Limited

Affected market: Grocery wholesaling

No. ME/3160/07

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 4 September 2007. Full text of decision published 12 September 2007.

PARTIES

Musgrave Investments plc (Musgrave Investments) is a wholly owned subsidiary of Musgrave Group plc (Musgrave), a wholesale food and grocery distributor in the United Kingdom, the Republic of Ireland and Spain. Musgrave supplies independent grocery retailers in Northern Ireland (members of its SuperValu, Centra and DayToday symbol groups and non-affiliated retailers) and in Great Britain (including members of its Londis and Budgens symbol groups).

J & J Haslett Holdings Limited (Haslett) is a wholesale food and grocery distributor in Northern Ireland. It supplies independent grocery retailers (members of its Mace, XL Stop & Shop and NearBuy symbol groups and non-affiliated retailers). Haslett's UK turnover for the year ended 31 December 2006 was approximately £191.7 million.

TRANSACTION

Musgrave Investments has agreed to purchase the entire issued share capital of Haslett, subject, among other things, to clearance by the relevant competition authorities.

The parties filed a satisfactory submission on 11 July 2007. The administrative deadline is therefore 6 September 2007.

JURISDICTION

As a result of this transaction Musgrave Investments and Haslett will cease to be distinct. The UK turnover of Haslett exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) 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.

THIRD PARTY VIEWS

The OFT contacted the parties' main competitors and a significant number of retailers in Northern Ireland, both customers of the parties and customers of other wholesalers. The views from the parties' competitors were mixed. Some retail customers of Haslett were concerned about the merger and the resulting uncertainty for them, but no other retailers were concerned.

ASSESSMENT

The main overlap in the parties' activities is in the wholesale supply of groceries to grocery retailers. On a national level, the parties' position does not give rise to competition concerns given the parties' small share of supply and the presence of several large competing wholesalers. In Northern Ireland, the parties will be the largest grocery wholesaler. However, they will still face significant competitive constraints. A number of alternative wholesalers will remain in Northern Ireland, the largest of which, Henderson, is not much smaller than the parties in share of supply. Although for some of the parties' customers switching to a different wholesaler is likely to be difficult in the short term, for other customers the barriers to switching are not insurmountable. This was confirmed by retailers' comments to the OFT. Also, the parties are constrained by competition at the retail level between their customers and vertically integrated multiple grocery retailers such as Tesco, Sainsbury's and Asda. There is potential for entry and expansion for grocery wholesalers in Northern Ireland, including by wholesalers that are currently only active in Great Britain.

The OFT did not find that the merger raises significant competition concerns in relation to the parties' purchase of groceries and their supply of groceries to foodservice customers, nor in relation to grocery retailing.

Third parties expressed relatively few concerns about the merger.

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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