Apollo Global Inc / BPP Holdings plc

OFT closed case: Anticipated acquisition by Apollo Global Inc of BPP Holdings plc.

Affected market: Professional education and training

No. ME/4153/09

The OFT's decision on reference under section 33(1) given on 1 July 2009. Full text of the decision published on 3 July 2009.

PARTIES

1. Apollo Global Inc (Apollo) is a part of Apollo Group Inc, a US company which provides higher education services in the United States. It has no activities in the UK (or within Europe). Apollo has a university in Chile and a university in Mexico.

2. Apollo is 80.1 per cent owned by Apollo Group Inc with the remaining 19.9 per cent owned by the private equity company The Carlyle Group, which itself has no investments in education services activities in the UK.

3. BPP Holdings plc (BPP) is a UK company listed on the London Stock Exchange. It offers professional education services in the UK in the areas of accountancy, finance, law and business. It also offers high school GCSE and A-Level courses at its three independent colleges in the UK. Its UK turnover for 2008 was around £142 million.

TRANSACTION

4. The acquisition of the entire issued, and to be issued, share capital of BPP will be undertaken by Apollo UK Acquisition Company Limited, a wholly owned subsidiary of Apollo set up for the purpose of acquiring BPP.

5. The proposed acquisition is subject to the City Code on Takeovers and Mergers.

JURISDICTION

6. As a result of this transaction Apollo and BPP will cease to be distinct. The UK turnover of BPP exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied.

7. The Office of Fair Trading (OFT) therefore believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation.

8. The parties submitted a Merger Notice on 12 June 2009 and the statutory deadline by which the OFT is required to make its decision in this case is 10 July 2009.

MARKET DEFINITION

Product scope

9. Apollo has no activities in the UK. In the US, its parent company, Apollo Group Inc, provides higher education services. [see note 1]

10. In the UK, BPP provides education services at the postgraduate, undergraduate, professional and school-leaver levels. By discipline, BPP offers the following services.

  • Training, published materials and examinations for the award of professional qualifications in accountancy, tax, financial services and actuarial services. Among the professional organisations which demand such professional qualifications are the Chartered Institute of Management Accountants, the Institute of Chartered Accountants of England and Wales, the Institute of Chartered Accountants of Scotland and the Association of Chartered Certified Accountants.
  • Postgraduate professional training in law. BPP has four law schools delivering the Legal Practice Course, Graduate Diploma in Law and the Bar Vocational Course approved by the Law Society. Further, it has been developing a range of Bachelor and Master's degree programmes in law.
  • GCSE and A-Level courses at its three independent fifth and sixth form colleges.

11. In addition to these, in September 2009 BPP plans to open a business school.

12. It may be the case that there are distinct economic product markets within each of the three broad discipline areas listed above, or it may be the case that the product market is wider than each of the three separate discipline areas. However, given the lack of overlap between the parties in the UK and the outcome of its competition assessment, the OFT has not found it necessary to conclude on the product market in this case.

Geographic scope

13. As with the product market, the OFT has not found it necessary to conclude on the geographic market because no competition concerns arise. However, the OFT has adopted a UK-wide approach in this case.

HORIZONTAL ISSUES

Market shares

14. There are no overlapping activities between the parties in the UK.

15. The parties submitted that they estimate that BPP accounts for around 30 per cent of the supply of accountancy professional education and training services in the UK.

16. For actuarial professional education and training services, the parties submitted that it is the Faculty of Actuaries and the Institute of Actuaries who select the provider of the services and BPP is currently the only significant provider selected.

17. BPP also accounts for around 30 per cent of postgraduate training in law, according to the parties.

18. For its GCSE and A-Level courses, BPP’s colleges are located in London, Birmingham and Cambridge. At the national level BPP's share of supply is very small. Given the lack of overlap between the merger parties the OFT has not found it necessary to examine GCSE and A-Level courses at the local level.
 
19. Given the lack of overlap between the parties, horizontal competition concerns do not arise in this case. There are also no vertical links between the parties and so competition concerns do not arise in this regard either.

THIRD PARTY VIEWS

20. The OFT contacted customers and professional bodies in this case. None was concerned about the proposed merger.

ASSESSMENT

21. BPP provides a range of professional and high school level education and training services in the UK. Neither Apollo nor any company within Apollo Group Inc (including those within The Carlyle Group) has any relevant activities in the UK. Therefore, the proposed merger does not alter any dimension of competition within the UK.

22. Consequently, the OFT does not believe that it is or may be the case that the merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.

DECISION

23. This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.

 

1.In the US Apollo Group Inc owns (among other assets) the University of Phoenix, Western International University, 11 ‘Insight Schools’ (high schools) and the Institute for Professional Development.

Published 1 July 2009