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OFT refers anticipated acquisition by SvitzerWijsmuller A/S of Adsteam Marine Limited

128/06    31 August 2006

The OFT today referred the anticipated acquisition by SvitzerWijsmuller A/S of Adsteam Marine Limited to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to the supply of harbour towage services in Liverpool and in the UK as a whole.

John Fingleton, OFT Chief Executive, said:

'The OFT assessed whether sufficient potential competition would remain after this merger involving the two largest harbour towage operators in the UK, who operate at ports which account for approximately 95 per cent of motor vehicle transportation, 90 per cent of the container traffic, 80 per cent of bulk cargo and 50 per cent of the general cargo through UK ports. The merger would create a monopoly situation in the port area of Liverpool, where customers are currently benefiting from competition. In relation to the rest of the country, on the basis of the evidence received, the OFT is concerned about the loss of potential competition resulting from the merger. Customers concerns about this merger were large scale, coherent and consistent, and supported the OFT's analysis.'

In order to accept undertakings in lieu of reference, the OFT must be confident that the competition concerns identified can be solved by means of the undertakings without the need for further investigation. In this case, while very much welcoming the willingness of the parties to put forward structural remedies, the OFT considered that it was not clear that the undertakings offered by the parties would adequately address the loss of competition arising from the merger, and were therefore considered to be insufficient. In any event, neither the extent of the competition concerns raised by the merger, nor the undertakings proposed to address them were considered to be clear cut.

The CC is expected to report by 14 February 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. The text of this decision will be published in the mergers section as soon as is reasonably practicable.

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