Property security sale to safeguard competition
17 Aug 2012
The Competition Commission (CC) will require VPS Holdings Limited to sell SitexOrbis’s business in Great Britain after ruling that the merger could harm competition and lead to higher prices for many customers.
After due consideration of responses, this confirms the CC’s provisional decision, which was published in June.
The parties are the country’s two leading suppliers of vacant property security services to local authorities and businesses (including residential and commercial landlords, retailers, facilities management companies and insurance firms). Vacant property security services involve the securing of vacant social housing and commercial properties through the provision of steel screens, doors and wireless alarms.
The CC has found that the merger has given the parties a very high share of the market for social housing, with limited competition from rivals or alternatives for customers from providers in adjacent markets. For commercial sector customers, competition is not uniform across the country. So although commercial customers in some areas will still have alternative suppliers, customers in other areas and those who require nationwide coverage would lose out from the merger. The CC considered whether new entry or expansion would offset this lessening of competition but concluded that this was unlikely.
The CC published a notice of possible remedies at the time of its provisional decision and has since been carrying out detailed consideration of the options. VPS will now need to find a buyer for SitexOrbis’s business in Great Britain, and obtain the CC’s approval for the proposed purchaser.
CC Deputy Chairman and Chairman of the VPS/SitexOrbis Inquiry Group, Professor Alasdair Smith, said:
‘We think that an effective way to protect competition for customers is for SitexOrbis’s business in Great Britain to be sold so it can continue as a close competitor to VPS. Without this, many customers would be faced with too little in the way of alternatives—either from existing competitors or potential new entrants—to prevent the merged company from raising prices. We did consider whether alternative remedies options would address our concerns but decided that divestment of SitexOrbis’s business in Great Britain as a whole is necessary to create an effective competitor.’
The CC’s final report and other details on the inquiry can be found here:
www.competition-commission.org.uk/our-work/vps-holdings-limited-of-sitexorbis-holdings-limited
Notes for editors
1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.
2. The OFT referred the merger on 5 March 2012 and the CC is required to publish its final report by 19 August 2012.
3. The members of the VPS/SitexOrbis Inquiry Group are: Professor Alasdair Smith (Group Chairman and CC Deputy Chairman), Katherine Holmes, Anthony Stern and Professor Puliyur Sudarsanam.
4. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.
5. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
6. Enquiries should be directed to Rory Taylor or Siobhan Allen or by ringing 020 7271 0242.
