OFT clears national addressing database joint venture
18/11 15 February 2011
The OFT has today decided not to refer a proposed joint venture creating a national addressing database to the Competition Commission.
The proposed joint venture combines the spatial address databases of Ordnance Survey and the Local Government Improvement and Development Agency (LGID), to create the National Address Gazetteer, a database of accurate geo-referenced addresses in England and Wales. This data is relied upon by the public and private sector to accurately locate addresses when delivering services such as public transport, road maintenance, utility management and emergency call-outs.
The OFT found that the parties provide the only two accurate geo-referenced addressing databases, and do not face competition from less frequently updated and geographically accurate databases, such as those used by satnavs. Consequently it found that the joint venture would create a monopoly in this market.
However, the OFT concluded that it was not proportionate to refer the market to the Competition Commission because:
- the Government is the parties' largest customer and will continue to enjoy substantial buyer power and influence over the joint venture
- in practice there has been limited opportunity for the private sector customers of the two parties to trade one off against the other, and in any case the size of the affected private sector market is relatively small and
- virtually all customers, both public- and private-sector, strongly supported the creation of the new database.
Amelia Fletcher, OFT Chief Economist and decision maker in this case, said:
'Comprehensive and accurate spatial addressing information is important in delivering frontline public services, as well as for certain private sector customers, so any competition concerns resulting from the joint venture needed careful consideration. A merger to monopoly would normally warrant further investigation. However, the Government's buying power, combined with expected benefits from combining these two databases, made a reference to the Competition Commission disproportionate.'
- The reference test - the OFT has a duty to make a reference to the Competition Commission if it 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.
- 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.
- The 'de minimis' exception is formally known as the 'markets of insufficient importance' exception to the duty to refer under the Enterprise Act 2002. This is the second time that the OFT has applied the 'de minimis' exception since the publication of its revised 'exceptions to the duty to refer' guidance (including 'de minimis' and its ability to accept undertakings in lieu of reference) in December 2010.
- Ordnance Survey and LGID are independent public sector bodies. The initiative by the Department for Communities and Local Government is designed to provide access to a definitive database of addresses in England and Wales for use by the public and private sector.
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