OFT refers anticipated acquisition by MDA of Quest Associates to the Competition Commission

24/07 14 February 2007

The OFT today referred the anticipated acquisition by MacDonald Dettwiler and Associates Ltd (MDA) of Quest End Computer Systems Ltd, Quest Systems Development Ltd and Cywood Management Ltd (collectively 'Quest Associates') to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to supply of property valuation network connectivity and workflow and administration software as a composite product. These are the systems that connect mortgage lenders, panel managers and valuers and enable requests for valuations and the valuation itself to be passed automatically through the chain.

Vincent Smith, OFT Senior Director, Competition said:

'The OFT assessed whether sufficient competition would remain after this merger involving the two closest competitors in the UK for the supply of these property valuation network services. On the basis of the evidence before it, the OFT believes that the merging parties are the two main competitors, that barriers to entry are high and that there is little or no countervailing buyer power. Furthermore most third parties who responded during the OFT's investigation said they were concerned about the merger.'

Although the parties proposed undertakings in lieu of a reference to the CC, the OFT considered that they did not resolve the competition concerns arising from the merger.

The CC is expected to report by 31 July 2007.

NOTES

1. 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.

2. 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.

3. The CC may extend the 24 week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

4. A Phase One investigation refers to a first stage merger investigation which, in the UK is the investigation carried out by the OFT, as apposed to a more in-depth investigation by the CC.

5. The text of this decision will be published in the mergers section as soon as is reasonably practicable.

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