Affected market: Financial Services
The OFT's decision on reference under section 33 given on 27 February
Bank of America Corporation (BoA) is incorporated in Delaware. Through
its subsidiaries it provides a diversified range of banking and
non-banking financial services and products throughout the US and in
selected international markets. BoA's principal activity in Europe is
global corporate and investment banking. FleetBoston Financial
Corporation (Fleet) is a diversified financial services company
incorporated in Rhode Island. Its principal European activities are in
the UK where it provides a range of corporate and investment banking
services including provision of credit to corporate clients, foreign
exchange and derivatives trading, cash management and business trading
services. Fleet's UK turnover in the 2002 calendar year was (see [note
The parties notified the transaction to the OFT on 30 January 2004. The
statutory deadline, which has not been extended, expires on 27 February
As a result of this transaction BoA and Fleet will cease to be
distinct. The UK turnover of Fleet exceeds £70 million, so the turnover
test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is
satisfied. A relevant merger situation is likely to be created.
The parties propose that there are three distinct sectors in banking: a)
retail banking, b) corporate banking and c) financial and investment
services. There is no overlap between the parties in retail banking in
the UK. There are overlaps between the parties in both corporate banking
(the provision of banking services such as deposits, international
payments, letters of credit and advice to corporate clients), and
financial and investment services (both foreign exchange services or
trading in foreign exchange, and derivatives trading).
In this case a cautious approach will be taken with regard to corporate
banking services, and the impact of this transaction at the national
level will be considered. With regard to financial services, shares of
supply on an international basis would perhaps be more representative of
the parties' competitive position. However, share of supply information
has only been provided on a UK basis. If concerns do not arise on this
narrower basis they are unlikely to exist on a wider frame of reference.
The parties submit that the merger will result in the following shares
of supply and increment on a UK basis:
Corporate Banking – [0-10 per cent (increment 0-5 per cent)] (see
Foreign Exchange Services – [0-10 per cent (increment 0-5 per cent)]
(see [note 2])
Derivatives Trading – [0-10 per cent (increment 0-5 per cent)] (see
There are a broad range of competing banks, such as JP Morgan,
Citigroup, Deutsche Bank, and the provision of corporate banking
services appears to be becoming increasingly globalised.
This case does not raise vertical issues.
THIRD PARTY VIEWS
Third parties did not raise any concerns about the merger.
The parties overlap in the provision of corporate banking, foreign
exchange services and derivatives trading services in the UK. However,
the combined share of supply of the parties in each of these product
areas is low, the increment is small, and there is a broad range of
competitors active in each of these sectors in the UK. In addition, the
banking industry is becoming increasingly globalised, widening
possibilities for established firms abroad to begin offering products in
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 UK.
This merger will therefore not be referred to the Competition Commission
under section 33(1) of the Act.
- Figure excised at the request of the parties.
- Figures replaced by range at the request of the parties.