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OFT refers aquisition of Lloyd's members' agency business

115/06    14 July 2006

The OFT today referred to the Competition Commission (CC) the completed acquisition of the Lloyd's members' agency business of Christie Brockbank Shipton (CBS) Private Capital Ltd by Hampden Agencies Ltd.

The OFT has decided that the test for reference is met in relation to the supply of members' agency services to members of Lloyd's, the London-based insurance market. Members' agents provide members of Lloyd's with analysis on syndicate participation and monitoring of syndicate performance as well as other administrative services.

The transaction has brought together the first and third largest members' agents at Lloyd's and reduced the number of competitors from three to two. This has led a number of customers to raise concerns.

Vincent Smith, OFT Director of Competition Enforcement, said:
 
'Fewer competing members' agents could lead to increased fees or reduced quality of service to members of Lloyd's. There was also concern that Lloyd's regulation may lessen competition. In light of this and other considerations, the OFT has asked the CC to examine further whether Hampden will be sufficiently constrained post-merger.'

The CC is expected to report by 28 December 2006.

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 a relevant merger situation has been created; and the creation of that situation has resulted or 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. The text of these decisions can be seen in the mergers section and will also appear in the Office's Weekly Gazette as soon as is reasonably practicable.

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