Affected market: Mobile phone retail
The OFT's decision on reference under section 33(1) given on 19 June
2008. Full text of decision published 3 July 2008.
Best Buy Co., Inc (Best Buy) is a specialist retailer of consumer
electronics, home office products, entertainment software, appliances
and related services. It operates stores and websites under a number of
brand names. In the UK, Best Buy’s activities are limited to its
investment in Geek Squad UK Limited (Geek Squad), a 50/50 joint venture
with the Carphone Warehouse Group plc. Geek Squad's UK turnover for the
financial year 2007/2008 was less than £2 million.
The Carphone Warehouse Group plc (CPW) is an independent retailer of
mobile telephones and services, with over 2,400 stores in nine countries
including the UK. The business which CPW will contribute to the joint
venture (the Distribution Business) includes the sale of mobile handsets
and similar devices; the entering into of air time contracts on behalf
of mobile networks with non-business customers; the provision of
insurance for mobile handsets, air time contacts and accessories; the
Geek Squad joint venture with Best Buy Mobile; and a joint venture with
Best Buy for mobile telephone retailing in certain Best Buy outlets in
the US. For the year ended 31 March 2007, the UK turnover of the
Distribution Business amounted to £2,306 million.
On 7 May 2008 the parties entered into a joint venture agreement through
which the Distribution Business and CPW’s fixed line telecommunications
businesses in Spain and Switzerland (together, the Joint Business) will
be owned as to 50 per cent by each of Best Buy and CPW. The transaction
is expected to complete by August 2008.
The transaction was notified to the OFT by way of an informal submission
on 15 May 2008. The OFT’s administrative deadline to announce its
decision is 18 July 2008.
As a result of this transaction Best Buy and the Joint Business will
cease to be distinct.
The UK turnover of the Joint Business 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.
As discussed above, Best Buy’s activities in the UK are limited to its
joint venture with CPW, Geek Squad. In the UK, there is no horizontal
overlap between Best Buy and the Joint Business, nor are there any
vertical links between them. None of the third parties contacted by the
OFT disagreed with this proposition, and no third party raised any
competition concerns about the merger.
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.