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OFT accepts undertakings instead of reference to the Competition Commission

75/07    18 May 2007

The OFT has decided to accept the undertakings offered by Inchcape plc (Inchcape) to address the competition concerns which arose from the acquisition by Inchcape of European Motor Holdings plc (EMH). This transaction will now not be referred to the Competition Commission.

The transaction raised competition concerns in relation to the provision of servicing and repairs for new and nearly new Volkswagen (VW) cars in the Northern Welsh Marches.

In lieu of reference to the Competition Commission, the parties have offered to make a divestment in the Northern Welsh Marches. The OFT considers that this proposed undertaking will clearly address the concerns identified in its decision of 26 March 2007.

Simon Pritchard, Director of Mergers, said:

'The loss of EMH as a competitor could have led to higher repair and servicing charges for the owners of new and nearly-new VWs in the area around Wrexham and Oswestry. We are content that the divestment offered by Inchcape will, when implemented, address our competition concerns.'

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. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.

4. Before accepting any such undertakings the OFT shall give notice of the proposed undertakings under Schedule 10 of the Enterprise Act 2002, and considered any representations made in accordance with that notice.

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

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