OFT closed case: Anticipated acquisition by Arcapita B.S.C.(C) of Viridian Group plc.
Affected market: Electricity, gas, steam and hot water supply
The OFT’s decision on reference under section 33 given on 21 December 2006. Full text of decision published 28 December 2006.
Please note that square brackets indicate figures or text which have been deleted or replaced with a range at the request of the parties for reasons of commercial confidentiality.
Arcapita Bank B.S.C.(c) [Note 1] (Arcapita) is an international investment firm with offices in Bahrain, Atlanta and London, whose four principal lines of business are corporate investment, real estate investment, infrastructure and energy investment, and venture capital. Arcapita has a number of portfolio companies in the UK including a [less than 10 per cent] interest in Zephyr Investments Limited which is active in the development and operation of wind farms in Great Britain.
Viridian Group plc (Viridian) is a public listed energy company registered in Northern Ireland. Viridian's activities are conducted through two principal subsidiaries: (i) Northern Ireland Electricity (NIE) - regulated electricity businesses in Northern Ireland; and (ii) Viridian Power & Energy Limited - an integrated company active in energy generation in the Republic of Ireland (ROI), and supply, through Energia. Energia is the market retail arm of Viridian, and supplies electricity to non-domestic electricity markets in both Northern Ireland and the ROI. Viridian's UK turnover in the financial year ended 31 March 2006 was £655 million.
On 6 October 2006, Arcapita announced its proposal to acquire, through ElectricInvest Acquisitions Limited (‘ElectricInvest’), the entire issued and to be issued share capital of Viridian. ElectricInvest is currently wholly owned and controlled by Arcapita. The Transaction is expected to complete by the end of 2006. The OFT received a submission on 1 November 2006. The administrative deadline is 29 December 2006.
As a result of this transaction Arcapita and Viridian will cease to be distinct. The UK turnover of Viridian exceeds £70 million, so the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. The 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.
Viridian is active in the transmission and distribution of electricity in Northern Ireland. It also operates transmission circuits interconnecting the Northern Ireland and Republic of Ireland transmission systems. Viridian (NIE) supplies electricity to domestic customers and small businesses in Northern Ireland and Viridian (Energia) supplies electricity to non-domestic customers in the Republic of Ireland. Viridian (Energia) also holds a licence for the supply of gas in Northern Ireland although it is not active in the supply of gas in Great Britain. Neither is Viridian active in the generation of electricity in the UK.
Arcapita holds a [less than 10 per cent] interest in Zephyr Investments Limited which is active only in the generation of electricity (by wind farms) in Great Britain. The parties therefore do not overlap in any activities as a result of this transaction.
The OFT does not consider that the parties have any material overlapping activities as a result of this transaction. Therefore the OFT does not believe that any concerns arise from this transaction. Third parties were not concerned.
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.
This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.
- Registered in Bahrain.