Completed acquisition by 3i Group plc of Uponor Limited

Affected market: Pipe supply and installation

No. ME/3678/08

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 7 August 2008. Full text of decision published 14 August 2008.

Please note that the square brackets indicate figures or text which have been deleted or replaced in ranges at the request of the parties for reasons of commercial confidentiality.

PARTIES

3i Group plc (3i) is a venture capital and private equity investor listed on the London Stock Exchange. 3i is the parent of a number of companies including Rasmussen GmbH/Norma Group (Rasmussen), a German based company active in the manufacture of pipe connections for the automotive industry, and Enterprise plc (Enterprise), which is active in outsourced support services to the utility sectors, including the installation and maintenance of thermoplastic (PE) pipes.

Uponor Limited (Uponor)  designs, manufactures and supplies PE pipes and fittings in the UK and the Republic of Ireland, as well as fittings and specialist installation services. Uponor, prior to the transaction, was a subsidiary of the Uponor Corporation, a housing and environmental technology company based in Finland and listed on the Helsinki stock exchange. Uponor's UK turnover for the financial year to end 2007 was around £[100–125] million.

TRANSACTION

On 18 June Inhoco 3445 Limited acquired the entire issued share capital of Uponor. Inhoco 3445 Limited's ultimate parent company is Inhoco 3443 Limited, a company which is majority owned (and controlled) by 3i Investors  and part-owned by an Executive Management Team of Uponor.

JURISDICTION

As a result of this transaction 3i and Uponor have ceased to be distinct. The UK turnover of Uponor 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 a relevant merger situation has been created.

The statutory deadline for the OFT to reach a decision in this case is 19 October 2008 and the administrative target deadline is 12 August 2008.

THIRD PARTY VIEWS

Almost all third parties were unconcerned about the merger. The OFT received only one merger-specific concern which was that Enterprise may try to promote the use of Uponor PE pipes. 

ASSESSMENT

The parties do not overlap at the horizontal level to any significant extent and therefore horizontal issues do not arise in this case.

Possible vertical concerns only arise in relation to the gas sector. However, there is currently little vertical relationship between PE pipe suppliers and installers as customers tend to acquire the pipes and the installation separately. This customer choice is likely to remain after the merger. The evidence before the OFT indicates that Uponor is unlikely to be able to foreclose downstream rivals in installation activities in the gas sector because it would find it difficult to tie in customers to the downstream activity. Customers do not consider such a strategy could be successful. Even if Uponor could tie in customers, it could not foreclose downstream rivals since they would still be able to switch to the gas sector from the neighbouring water and telecommunications sectors. As such, this merger does not increase Uponor's ability to raise prices to gas sector customers beyond that which it already possesses.

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.

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