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OFT refers ventilation ducting merger to the Competition Commission

99/07    11 July 2007

The OFT has referred the anticipated acquisition by Polypipe Building Products Limited of the ventilations systems business of Verplas Limited to the Competition Commission (CC).

The OFT has decided that the test for reference is met in relation to the supply of rigid ducting in the UK.

Simon Pritchard, Director of Mergers at the OFT, said:

'The merger reduces the number of UK manufacturers of rigid ducting from three to two and Polypipe's post-merger share is over 50 per cent. Customers have characterized the parties as close competitors and many are concerned about this proposed reduction in their supply options. On the evidence available to us, we do not believe that the threat of greater imports or domestic entry is sufficient to remove competition concerns. We have therefore asked the Competition Commission to investigate this transaction further.'

The CC is due to report by 25 December 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 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. The CC is expected to report by 18 December 2007.

4. The full text of this decision will appear in the mergers section.

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