SUMMARY OF
BICC PLC AND STERLING GREENGATE CABLE COMPANY LTD: A REPORT
ON THE MERGER SITUATION
On 14 March 1990 the Secretary of State
for Trade and Industry asked us to investigate the merger
between BICC plc (BICC) and Sterling Greengate Cable Company Ltd
(Sterling Greengate) (see Appendix 1.1).
BICC is the largest cablemaker in the United
Kingdom and is a major international engineering business.
Its turnover in 1989 was 3.8 billion, within which United
Kingdom sales of cables were 458 million. Sterling Greengate
is a much smaller company. It is the sixth largest cablemaker
in the United Kingdom, with most of its production being
of mains, elastomeric wiring or PVC armoured wiring cables.
Its turnover in 1989 was 43 million.
Sterling Greengate was a wholly-owned subsidiary
of Raytheon United Kingdom Ltd (Raytheon). BICC acquired
Sterling Greengate in December 1989, after Raytheon
had put the company up for sale.
In considering whether the merger operates,
or may be expected to operate, against the public interest,
the main issue we considered was whether the merger would
reduce competition in the three markets where there is an
overlap between the products made by BICC and by Sterling
Greengate, namely mains, elastomeric wiring and PVC
armoured wiring cables. In the three markets, based on 1989
figures, the combined market shares would be for mains cables
35 per cent, for elastomeric wiring cables 37 per cent and
for PVC armoured wiring cables 23 per cent.
The effect of the merger would be to take
the only remaining medium-sized supplier of power cables
out of the market. However, in each of the three markets
in which the production of BICC and Sterling Greengate overlapped,
at least three major United Kingdom competitors would remain
after the merger. We considered that if Sterling Greengate
had remained independent, it was unlikely to have had sufficient
underlying strength to remain a competitive force in the
longer term, taking into account the likely changes in the
pattern of demand.
The existence of substantial and knowledgeable
buyers and the potential for increased imports would also,
we concluded, help to ensure that the markets remained competitive.
We received little evidence from users or customers that
the removal of Sterling Greengate as a separate enterprise
would materially damage competition or significantly affect
prices or customer service. We concluded that there was no
likelihood of a materially adverse effect from the merger
in any of the three markets.
We therefore concluded that the merger might
not be expected to operate against the public interest.
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Last Revised: June 1999
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