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OFT refers proposed acquisition by Unum Ltd of the Employee Benefits business of Swiss Life (UK) plc

PN 137/03    31 October 2003

The OFT has referred the proposed acquisition by Unum Ltd of the Employee Benefits business of Swiss Life (UK) plc to the Competition Commission (CC).

The OFT believes that if the merger went ahead it might result in a substantial lessening of competition in the supply of group income protection, group life and group critical illness insurance products and services - i.e. company policies for employees.

Announcing the referral John Vickers, Chairman of the OFT, said: 'There is a significant concern that the merger will result in a reduction of choice for group risk insurance customers, particularly for those with large contracts, as the number of competitors will be reduced from three to two.  The OFT is concerned that barriers to expansion for smaller companies may exist. Shares of supply have been relatively stable, perhaps reflecting switching costs and informational advantages that existing insurers enjoy.'

The CC is expected to report by 16 April 2004.

NOTES

1. The Enterprise Act 2002 empowers the Office of Fair Trading to refer to the CC actual or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or which involve the acquisition of turnover in the UK of over £70m.

2. The CC may extend the period within which its report must be prepared by no more than eight weeks if it considers that there are special reasons for doing so.

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