Anticipated acquisition by Resolution plc of Friends Provident plc

Affected market: Life insurance and asset management services

No. ME/3299/07

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 12 October 2007. Full text of decision published 19 October 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 for reasons of commercial confidentiality.

PARTIES

Resolution plc (Resolution) is a primarily a purchaser and operator of closed life funds, although it is also active in open life insurance. Resolution also operates an asset management business, which in addition to managing the assets of its closed life funds, provides asset management services to third party institutional customers and a range of retail asset management products.

Friends Provident plc (Friends) provides life insurance, pension products and asset management services. Friends' UK turnover for the year ended 31 December 2006 was £[ ] million.

TRANSACTION

Resolution intends to acquire the entire issued share capital of Friends. The parties submitted a merger notice to the OFT on 14 September 2007. The OFT's statutory deadline expires on 12 October 2007.

JURISDICTION

As a result of this transaction, Resolution and Friends will cease to be distinct. The UK turnover of Friends 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

One third party expressed a concern about the transaction. However, as the concern did not relate to the competitive assessment of the transaction it was not considered further.

ASSESSMENT

Friends and Resolution overlap in the provision of life insurance and asset management services.

For the purposes of this assessment, the impact of the present anticipated transaction has been considered in relation to the UK life insurance market, as well as on the various product segments and separately on the open and closed life funds segments. Furthermore, the impact of the present transaction has also been considered on the UK asset management market as well as on the various possible segments by funds and by customers. Whichever the appropriate frame(s) of reference, both the merged entity's market share and the increment arising from the transaction is so small as to raise no competition concerns.

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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