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OFT accepts undertakings in merger between Transocean Inc and Globalsantafe Corp

48/08    11 April 2008

The OFT has decided today to accept the undertakings offered by Transocean Inc (Transocean) to address the competition concerns arising from the completed merger between Transocean and GlobalSantaFe Corporation (GSF). As a result, this transaction will not be referred to the Competition Commission.

In a global transaction between two US-based players, Transocean and GSF completed their merger on 27 November 2007. In lieu of reference to the Competition Commission, Transocean has offered to divest two floating drilling rigs located in the UK continental shelf (UKCS), the GSF Arctic II and the GSF Arctic IV. These two rigs constitute the entire increase in Transocean's rig fleet in the UKCS as a result of the merger. The OFT considers that Transocean's undertakings will clearly address the competition concerns it identified in its decision of 26 November 2007, also taking into account the response to the OFT's consultation on proposed undertakings of 8 February 2008. The OFT will assess each proposed purchaser's overall ability and incentive to replace the competition provided by GSF. In this case, because the rigs are mobile, the OFT will specifically need to be satisfied of the purchaser's firm intention to keep the rigs in the UKCS for at least three years.

Simon Pritchard, OFT Senior Director of Mergers, said:

'Divestment of these rigs to a suitable buyer will mean that UK customers benefit from competition restored to its pre-merger level. This case shows the parties and the OFT working efficiently to resolve important UK competition issues without delaying a large global transaction whose centre of gravity is abroad.'

NOTES

1.  Before and unconnected to the merger, GSF had committed to deploy a third rig, the GSF Arctic III, outside the UKCS as of September 2008. Accordingly, the OFT's competition concerns and remedy to this merger are unrelated to this rig.

2. 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.

3. 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.

4. 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.

5. 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.

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

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