OFT clears acquisition of Energis by Cable & Wireless

198/05 25 October 2005

The OFT has today announced that the anticipated acquisition by Cable & Wireless plc of Chelys Ltd (owner of the Energis Group) will not be referred to the Competition Commission.

The parties overlap in the supply of various telecommunications services in the UK to business customers. The principal third party concerns, and the OFT's primary focus, related to the supply of telecoms network capacity to phone companies that offer consumers an alternative to BT. This is referred to within the industry as the supply of wholesale indirect access (IDA) services to carrier pre-selection (CPS) retailers (note 1).

Vincent Smith, Director of Competition Enforcement at the OFT, said:

'The OFT has carefully evaluated third party concerns against all the evidence. We do not believe that Cable & Wireless could impose higher post-merger prices on CPS customers, because of the number of credible competitors to which CPS retailers can turn to supply them with wholesale services.'

NOTES

1. Wholesale IDA services provide a CPS retailer with access to the wholesale supplier's entire telecoms network, through which the retailer's voice telephone traffic will be routed. CPS retailers offer customers connected to a BT line the choice to use their telephony services instead.

2. The Reference Test — The OFT has a duty to make a reference to the CC if the OFT 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; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.

3. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.

4. The text of the decision is available from the Mergers section of this website.

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