Sassoon Saleh, FCA MIoD About Us

Wienerberger/Baggeridge Brick merger – brick manufacture – allowed in 2007

Greif/Blagden – steel drum supplies – CC reversed a provisional finding of an SLC on the grounds of new evidence – merger therefore cleared in 2007

Woolworths [subsidiary]/Bertram – wholesale book distribution – allowed in 2007

BSkyB/ITV– case in 2007 to consider whether BSkyB has material influence, following its 17.9% investment in ITV, and/or whether there are adverse public interest consequences – CC decided that the merger situation created an SLC and required BSkyB to reduce its shareholding to 7.5%. BSkyB appealed the decision with other parties, and the CC decision was upheld in terms of the SLC issue. However, on the public interest test, the CAT noted a failure in law to consider the media plurality issue (ie sufficiency of persons with control of media enterprises servicing the relevant audiences with news).

As the CAT upheld the CC’s decision on the competition assessment but not the CC’s interpretation of aspects of the media public interest test, it did not refer the case back to the CC on the grounds that the Commission’s remedy to require BSkyB to reduce its shareholding below 7.5 per cent would be unaffected by the alternative interpretation of the media public interest test. The Court of Appeal agreed to hear the case in March 2009, but dismissed Sky's appeal on all grounds in January 2010.

Sportech/Vernons – pools gaming merger – cleared in 2007

Macquarie UK Broadcast Ventures/National Grid Wireless – terrestrial broadcast transmission - merger investigated in 2007/08 – CC provisionally decided that the merger situation created an SLC. However, because of the significance of customer benefits, the CC concluded uniquely in this case that undertaking remedies and price controls would be preferable to divestment. The CC consulted and agreed on undertakings in order to allow the merger to proceed in mid 2008.

Long Clawson Dairy / Millway business (part of Dairy Crest) – supply of blue Stilton cheese – cleared in 2008. The CC accepted the failing firm defence in allowing this merger to proceed, but noted this is unusual and should not be seen as a precedent for other cases.

Capita acquisition of IBS OPENSystems plc – in late 2008, the OFT identified this as a completed acquisition for investigation by the CC regarding specialised software supplied to local authorities. The CC decided the merger created an SLC, and divestment remedies were needed to restore competition to the pre-merger level - specifically the part of the acquired business supplying R&B software to local authorities.

Holland & Barrett acquisition of Julian Graves stores – supply of nuts, seeds and fruits to consumers from specialised health shops - cleared in 2009.

Ticketmaster / Live Nation - the UK aspects of this international merger were referred to the CC in 2009 eg regarding Live Music and ticket agency markets. The CC provisionally decided that an SLC arises, and remedies were required. However, following this, the parties submitted further evidence and arguments which resulted in the CC reversing its earlier decision and permitting the merger in the UK. The CC noted that the impact of the UK was unlikely to effect the entry of a major new competitor in the UK (CTS Eventim), and action to harm competitors could result in short-term losses for the merged group, but uncertain benefits.

CTS Eventim appealed the final decision as noted above as being incorrect and claimed it was not given a fair chance to make its submissions effecting the CC's final decision. The CC agreed (in February 2010) for the CAT to quash the CC's final report, and the CC will reconsider the case again in a three months time-period. The CC reconsidered the matter and cleared the merger.

Stagecoach’s purchase of two bus companies in Eastbourne – cleared in 2009

Sports Direct acquisition of 31 stores from JJB Sports – cleared in 2010. The CC noted that Sports Direct and JJB were undoubtedly each other’s closest competitors nationally and this had not changed as a result of the transfer of the relatively small number of stores. It found that the prices and range on offer in any individual Sports Direct store were not significantly affected by whether there is a nearby JJB store or not, but rather depended on the degree of overall competition between the two retailers at the national level.

Bright Solid potential acquisition of Friend Reunited – cleared in 2010. This was referred because of competition concerns from a reduction in three online genealogy services providers to two. Cleared especially because the Ancestry.co.uk, would remain the largest supplier in the market and its presence, along with potential entry by new suppliers and alternatives provided by free sites, was expected to ensure that the merged company would face strong competition.

Mergers are assessed by considering the impact on competition of the merged firm in the relevant product and geographic markets ie whether it has market power to, for example, increase prices, or lower quality, range, service or innovation. If any of these outcomes are expected, the competition authorities may block all or part of the merger on the grounds that it causes a substantial lessening of competition (SLC). Remedies will be decided to take account of the SLC identified, and after considering whether there are any customer benefits arising from the merger.

Merger assessment depends upon the particular facts and circumstances of a case, and can include examination of some or all of the following (not an exhaustive list):

· closeness of competitionbetween the merging firms, and other parties

· the negotiating strengths of suppliers and customers

· ease of entry and/or supply-side substitution

· supply, demand and capacity forecasts

· whether the merger would reduce competition following the merger

· the likelihood of co-ordinated or unilateral effects

· the likelihood of portfolio effects

· the likelihood of vertical effects eg potential foreclosure

· whether there is a failing-firm scenario

· the regulatory environment

Below, I list many of the UK mergers considered in the last 10 years. Please look at the information and you will get an idea of which mergers were successful, and which types of mergers were blocked, or partially allowed after remedies.

Some cases led to appeals to the Competition Appeal Tribunal (CAT).

The Competition & Markets Authority (CMA), is empowered to carry-out short phase 1 merger investigations into all situations where businesses merge in the UK and either:

the turnover of the acquired business is more than £70m, or
the combined business has a share of supply of more than 25% in a [defined] market or region in the UK.

The CMA's short investigation will either clear the merger (which can include situations where parties form a joint venture, or obtain material influence/control in a business), or request undertakings in lieu of referral of the merger to a more intense phase 2 investigation under the CMA's powers.

Prior to 2014, the CMA's merger investigation function was carried out by the OFT doing the phase 1 investigation, and the separate Competition Commission (CC) doing the phase 2 investigation. These organisations were merged in 2014 to form the CMA.

Upon a phase 2 referral, the CMA is duty-bound to carry out a more detailed investigation of up to 24 weeks (assuming no extension), to decide whether the merger creates or is expected to lead to a substantial lessening of competition (SLC). If so, the CMA then decides what specific remedies (if any) may be necessary to resolve the competition problems identified. The CMA is empowered to enforce its remedy decisions by Orders and can compel acquiring groups to divest all or part of the business acquired. The investigations are complex and very demanding in terms of time, skill and resources.

In addition, the Secretary of State for Business Enterprise is empowered to refer merger cases to the CMA where there is a public interest concern. So far, the scope for such public interest intervention cases arise if they effect :

(a) interests of national security (including public security);
(b) various considerations relating to the media eg plurality in the provision
of news services; and
(c) the interest of maintaining the stability of the UK financial system.

The Secretary of State is also empowered to waive some mergers from referral to the CMA, eg as happened in the case of LloydsTSB acquiring HBOS in 2008 to form Lloyds Banking Group. Here, it was decided that the merger should be allowed on balance, to ensure the stability of the UK financial system even though an anti-competitive outcome of the Merger had been identified in the OFT Report, and that the public interest was best served by clearing the Merger. This decision was upheld in an appeal to the Competition Appeal Tribunal (CAT).

Major cross-border merger cases (where for example a large proportion of the acquired business operates overseas) may be referred for clearance or remedial action to the EU Competition Commission or Regulators in other jurisdictions.

Sassoon Saleh, FCA MIoD

Zipcar Inc / Streetcar Limited - operation of car clubs in the UK. Cleared in 2010 as CC expected the market to rapidly grow and new entry would constrain power of the merged firm.

Ratcliff Palfinger/Ross & Bonnyman - Commercial vehicle tail lifts spare parts business - cleared in summer 2011

Stena AB / DFDS Seaways Irish Sea Ferries - cleared in summer 2011

Sector Treasury Services Ltd (STS) of Butlers business - provides treasury management advisory services to local authorities - provisionally cleared in summer 2011. The CC concluded that the merger was likely to cause a small reduction in competition compared with the counterfactual where Butlers would be wound down by its owners (ICAP) and its contracts subject to retendering. Given the small overall size of the relevant market, the CC believed that the impact of this small reduction in competition was likely to be minor.

Thomas Cook, (Co-operative Group) CGL and Midlands joint venture to include all of CGL’s, Midlands’, and some of Thomas Cook’s travel businesses - referred in 2011 and cleared.

Acquisition by BATS Trading of Chi-X Europe - cleared in 2011 - parties operate Multilateral Trading Facilities (MTFs) and related services to enable market participants (investment banks, brokers and dealers) to trade pan-European equities through a single platform as an alternative to trading on national exchanges, such as the London Stock Exchange.

Kerry Foods acquisition of the frozen ready meals business of Headland Foods Limited - cleared in 2011

Anglo American and Lafarge merger - anticipated construction materials joint venture - referred in 2011 - decision to permit merger only after significant divestment remedies to create a third competitor. SLCs were found in the market for supply of bulk cement as a result of coordinated effects; many markets in supply of primary aggregates for construction activities, and various other specialised markets for aggregate inputs. [NOTE - see also information on a separate market investigation into the supply of aggregates in the UK, which was referred in 2012]

SRCL & Ecowaste Southwest - waste management services in a part of the UK - referred in 2011 - decision to block acquisition and require divestment. SRCL is appealing this decision in 2012 on various ground.

Alpha Flight Group and LSG Lufthansa - in-flight meals anticipated joint venture - cleared in 2012

South Staffordshire & Cambridge Water merger - water supply in parts of UK to around 680,000 customers - provisionally cleared in 2012 but CC noted concern at potential risk of loss of a comparator to OFWAT (the Water Regulator). However, the CC recognised that OFWAT still had around 18 other water companies for its comparative quantitative analysis and efficiency analysis of the UK water market to mitigate such risks.

DCC (GB Oils) acquisition of Total's Butler oil business - distribution of oil in the UK - cleared in 2012

VPS acquisition of Sitex Orbis - CC found a SLC in the supply of services to secure vacant properties with steel shields, resulting in need for remedies in 2012

McGill's Bus Services / Arriva Scotland - acquisition of business and assets of Arriva Scotland West. Cleared in 2012.

Epwin Holdings & Latium Building Products - PVC branded building products for use in new-builds and refurbished properties - cleared in 2012.

Rank Group / Gala Casinos - casinos operating in the UK - SLC finding in 2013 needing divestment of casinos in six local areas before merger approved.

Global Radio / GMG Radios - completed acquisition of major radio stations in the UK - SLC finding in 2013 requiring partial disposal of radio stations operating in some parts of the UK because of the adverse impact on local advertisers.

Groupe Eurotunnel / SeaFrance assets - completed acquisition of cross channel Dover to Calais ferry operator assets - SLC finding in 2013 needing remedies - concern that merger could lead to increased prices

Booker / Makro - completed acquisition of 2 major cash and carry wholesalers in GB, supplying caterers and independent retail outlets - cleared in 2013

Royal Bournemouth Hospital / Poole Hospital - merger of foundation trust hospitals - referred in 2013 - potential problems with benefits of merger

AG Barr / Britvic - anticipated acquisition of major soft drink brands in the UK - cleared in 2013

AEG Facilities UK & Wembley Arena - contract to manage Wembley Arena, effecting competition in large indoor entertainment venues in the London area - cleared in 2013.

Ryanair / Aer Lingus - referral of a 29.8% minority interest by Ryanair into Aer Lingus - in 2013, the CC noted its concerns that the minority shareholding could give RyanAir material influence over Aer Lingus and harm competition in flights between the UK and Ireland - the CC decided to force divestment down to 5 per cent. This case has been complicated with involvement of the UK Courts, the CAT, as well as examination by the European Competition Authorities. The disputes were resolved by 2015.

Imerys / Goonvean kaolin business - completed acquisition of business which OFT thought would create monopoly for supply of kaolin in the UK. It was a small merger but considered to be important for investigation - referred in 2013. Decision on SLC in kaolin requiring remedies

Optimax / Ultralase business - laser eye surgery. Cleared based on failing-firm defence.

Cineworld / City Screen - completed acquisition of cinema chain - referred in 2013. Decision on SLC requiring disposal of cinemas in 3 locations in the UK.

EWS Railway Holdings / Marcroft Engineering – not allowed in 2006 - forced sale

Pan Fish / Marine Harvest – salmon farming merger – allowed in 2006

Stericycle / Sterile Technologies – waste disposal services – not allowed in 2006, and divestment remedy imposed. This case went to appeal, which failed to stop the divestment remedy.

Stagecoach and Scottish Citylink – coach/bus joint venture - not allowed in 2006, and divestment remedy imposed.

Hampden Agencies / CBS Private Capital – agencies to Lloyds insurance market – allowed in 2006

Hamsard / Academy Music – music venues – allowed in 2007 on condition that 2 music venues in London were divested

SvitzerWijsmuller /Adsteam Marine – harbour towage and terminal towage services – divestment in 2007 of either Svitzer or Adstream operations in Liverpool

Stonegate Farmers Ltd / Deans Food Group – supply of eggs and related products – not allowed and remedies ordered in 2007

Mid-Kent Water/South-East Water – CC noted the merger may be possible in 2007, but the regulator (OFWAT) should not be prejudiced by less information coming from the separate entities now being merged. Limited remedies were considered

Kemira GrowHow/Terra Industries – provisional finding in May 2007 that SLC arises in markets for supply of carbon dioxide, nitric acid and amoinia – divestment and undertakings were agreed as the final remedies package

I have worked on a large variety of merger investigations - if you contact me, I can say more about what I do in these specialised investigations, and how my involvement can help you attain your goals, either to object to the merger under investigation, or to help gain approval of the merger with minimal need for remedies.

As a lot of the work I do is confidential, or relates to business secrets, I can not mention this here. If you have any questions, don't hesitate to contact me.

Game Group/Game Station – computer games retailing – cleared in 2007

BOC/Ineos – distrbution of packaged chlorine products – this merger in 2008 had a market under £10m, but the CC decided an SLC would arise, and is considering remedies.

Project Kangaroo joint venture between BBC, ITV and Channel 4 for video on demand services – in late 2008, the CC decided an SLC would arise, and in early 2009 concluded that prohibiting the joint venture was the only remedy that would address the SLC and adverse effects that it had found.

NuFarm/AH Marks acquisition – in 2008, the OFT identified this as a completed acquisition in the chemical fertilisers industry [ie chemicals known as 'MCPA' and '2,4-D', used to make herbicides]. This merger was under the £10m de-minimis threshold for referrals, but the OFT considered it important enough to refer to the CC. The OFT also noted that the parties had not voluntarily pre-notified this merger, which it picked-up via its market intelligence unit. The CC subsequently decided that the merger gave rise to an SLC and required remedies.

The CC decided that, while a divestiture of some description is usually the most comprehensive and proportionate remedy,looking at the specific and unusual circumstances of this case and comparing the two effective remedies as a whole, it considered that Nufarm’s remedy proposals were more targeted to the specific SLCs that were identified and so preferred them to the divestiture option. The divestiture remedy would however apply if Nufarm’s proposals (in the form of contractual undertakings approved in 2009) don’t work, in practice.

Somerfield / Morrison Supermarkets – partially allowed in 2005 - some stores had to be divested following the acquisition. Somerfield appealed the CC decision, but lost

Ardagh International / Redfearn Glass – allowed in 2005

National Express Group / Thameslink / Great Northern Rail – allowed in 2005

British Salt / New Cheshire Salt Works – allowed in 2005

Napier Brown Foods / James Budgett Sugars – allowed in 2005

Bucher Industries AG / Johnston Sweepers – allowed in 2005

Emap / ABI Building Data – IT and specialist software – merger not allowed in 2005

Serviced Dispense Equipment (SDEL) / Coors Brewers – merger not allowed in 2005

London Stock Exchange (with Deutsche Bourse or Euronext) – allowed in 2005 subject to undertakings

Vue Entertainment / A3 Cinema Limited – allowed in 2005, subject to sale of some cinemas

HMV Group [Waterstone's] / Ottakar's – bookshops merger allowed in 2006

Macaw (Holdings) / Cott Beverages – allowed in 2006

Heinz / HP Foods Group – allowed in 2006

Omnicell / SurgiChem - providers of adherence packaging ie products to repackage a patient's medicines to help them take the correct dosage at the correct time. Cleared in 2014.

Alliance Medical / IBA molecular - suppliers of radioactive tracer used in PET-CT scans in hospitals. Cleared in 2014 on failing firm defence that IBA would have exited this market because of persistent losses in the UK.

Breedon / Aggregates - completed acquisition for aggregate quarries, asphalt plants, and related services. Cleared in 2014.

Tradebe / Sita UK - joint venture in waste management services - cleared in 2014.

Ericsson / Creative (Red Bee Media) - proposed acquisition in linear playout services to broadcasters - cleared in 2014.

Xchanging / Agencyport (Red Bee Media) - supplies specialist software to the insurance industry - cleared in 2015.

Pork Farms / Kerry Foods - chilled savoury pastry business - cleared in 2015.

Reckitt Benckiser / K-Y Brand - intimate lubricants sold via grocery retailers and pharmacy chains - SLC found in 2015 - merger was permitted provided licensing undertakings were given to the CMA's satisfaction over an 8-year period.

Sonocco Products / Weidenhammer Packaging - manufacturers of consumer packaging products, and composite cans for fackaging food and non-food products - cleared in 2015.

Ashford St Peters NHS Trust / Royal Surry Country - clinical services in Ashford, Chertsey and Guildford - cleared in 2015.

99p / Poundland - shops selling grocery, health and beauty products, and general merchandise, almost all around the £1 price point - cleared in 2015.

Pennon Group / Semcorp Bourneouth Water Investments - owner of South West Water merging with Bournemouth Water Limited - supplying water and sewerage utility services to customers in South West and Southern England. The CMA found the merger would not prejudice the abiluty of Ofwat (as regulator) in carrying out its functions, make comparisons between different water enterprices, and thereby ensure adequate water services across the UK - the merger was cleared in 2015.

BT Group / EE - provider of mobile and fixed communications services to retail customers, and wholesale mobile serices to other communication providers in the UK. This was a complex investigation in which the CMA looked at the effect on competition in retail mobile, wholesale mobile, mobile backhaul, wholesale broadband and retail broadband markets - the merger was cleared in early 2016.

Linergy / Ulster Farm By-Products - providers of animal rendering services from Northern Ireland base. Products include meat and bone meal and tallow - cleared in early 2016.

Arriva Rail North / Northern rail franchise - CMA decided in 2016 that the award of the franchise could produce SLCs for rail customers travelling in 3 parts of northern England. The remedy was a fare increase control, to be implemented by agreed undertakings.

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Ladbrokes / Coral - merger of second and third largest retail bookmakers in the UK by number of betting shops. They also provide betting and gaming products on-line and by telephone, and on racecourses. CMA decided in July 2016 that there were some 640 locations in the UK where an SLC could arise by worsening the betting offer to customers at the local and national level. The remedy was divestment of around 350 to 400 betting shops to one or more qualified buyers, who required approval by the CMA. The merger could only happen when the sale of shops was substantially completed.

Iron Mountain / Recall - providers of records management services, off-site data protection services, specialist data and materials storage services for oil and gas companies, and document handling ancillary services in the UK. CMA decided in 2016 that an SLC could be expected in the effected markets in Aberdeen and Dundee areas. Iron Mountain proposed the disposal of a business operating in north-east Scotland, which the CMA accepted would be an effective and proportionate remedy in this case.

Celesio / Sainsbury's Pharmacy Business - merger of Lloyds pharmacy chain with the Sainsburys pharmacies business. CMA decided in 2016 that SLCs would arise in 12 areas in the UK from overlap of the merging chains, and where the parties would be their closest competitors, with few alternatives for customers. The remedy was divestiture of the Lloyds pharmacies in the 12 effected areas within a specified time period.

Clariant / Kilfrost - anticipated acquisition by Clarion of certain assets of Kilfrost. The relevant products were aircraft and rail de-icing fluids. CMA decided an SLC could arise, and the parties therefore abandoned the merger in 2016.

I hope the above gives you a good understanding of merger cases handled by the CMA over many years till 2016, and what happened. If appropriate, please do not hesitate to talk to me abour cases after 2017.