Completed acquisition by Masstock Arable (UK) Limited of CSC Crop Protection Limited

Affected market: Crop protection and agronomy advice in Scotland/Northumberland and the North East of England

No. ME/4094/09

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 June 2009. Full text of decision published 24 June 2009.

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

PARTIES

Masstock Arable (UK) Limited (Masstock) distributes agricultural input products, such as fertilisers, herbicides and seeds, and provides agronomy consultancy services. It also has limited activity in relation to the application of chemicals.

CSC Crop Protection Limited (CSC) also distributes agricultural input products, provides agronomy consultancy services and is active in the application of chemicals in Scotland and the North East of England. CSC's total turnover in its last financial year in the UK was approximately £35 million.

TRANSACTION

On 7 April 2009, Masstock purchased the entire issued share capital of CSC. The OFT's administrative deadline for making a decision in this case expires on 12 June 2009, and the statutory deadline expires on 6 August 2009.

JURISDICTION

As a result of this transaction Masstock and CSC have ceased to be distinct. The parties overlap in the distribution of crop protection products and supply of agronomy advice in Scotland and Northumberland, where they submit, and the OFT agrees, they have a combined market share of approximately [40-50] per cent. Therefore the share of supply test in section 23 of the Enterprise Act 2002 (the Act) is met. The OFT therefore believes that it is or may be the case that a relevant merger situation has been created.

THIRD PARTY VIEWS

In general, customers were not concerned about the impact of the transaction. A small number raised issues about the ability to source alternative crop protection and agronomy products in the event of a price rise. These concerns, however, have been addressed above.

Competitors were also generally neutral as to the effect of the merger, although some did have some concerns. One stated that the merger will reduce competition, while another indicated that aggressive pricing by Masstock could squeeze competitors out of the market.

ASSESSMENT

Masstock and CSC mainly overlapped in the distribution of crop protection products and provision of agronomy advice in Scotland/Northumberland and the North East.

In Scotland and Northumberland, the merger has resulted in Masstock having a market share of approximately [40-50] per cent, being significantly larger than the next largest competitor. In the North East, the merged entity will also be the largest competitor, with a market share of [20-30] per cent. In both regions, however, a significant number of alternatives exist for customers, with at least four being within a two hour drive time in Scotland and Northumberland, and nine in the North East. If the markets are defined as Scotland/Northumberland and the North East, the merged entity will continue to face competition from the five other national players.

While limited evidence of actual switching was received, competitors and customers agreed that customers are price-sensitive and would switch suppliers, either for crop protection products or agronomy advice or both, if prices increased by ten per cent.

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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