British Land Company plc / Pillar Property plc
OFT closed case: Anticipated acquisition by The British Land Company plc of Pillar Property plc.
Affected market: Real estate
The OFT’s decision on reference under section 33(1) given on 15 July 2005. Full text of decision published 12 August 2005.
British Land Company plc (British Land) is a property investment company listed on the London Stock Exchange. The company invests in, manages and develops property principally in the retail and City office sectors.
Pillar Property plc (Pillar) is a listed company active in both the UK and European commercial property markets. The company’s principal investments are focused on UK retail parks.
British Land is proposing the acquisition of sole control over Pillar. The parties notified the transaction to the OFT on 10 June 2005 and the administrative target is 5 August 2005.
As a result of the proposed transaction, British Land and Pillar will cease to be distinct. Through its wholly owned subsidiary, Pillar Property Management Limited, Pillar also acts as property adviser to – and has investments in the form of units in – four unit trusts investing in office and retail park properties, viz: Hercules Unit Trust (HIT), Hercules Income Fund, (HIF) City of London Office Unit Trust (CLOUT) and Pillar Retail Europark Fund (PREF).
The OFT considers that Pillar consequently may have material influence over the management of these four unit trusts and that the turnover attributable to Pillar for the purposes of 'the turnover test' in the Act should include the turnovers of each of HIT, HIF, CLOUT and PREF. On which basis, the UK turnover of Pillar exceeds £70 million and the turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act) is satisfied. British Land's legal advisors have been consulted and have accepted this proposition. 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.
There is minimal horizontal overlap between the parties’ respective operations in the real estate sector. The parties’ retail developments overlap in only four locations. In none of these four locations would a 25 per cent share of supply be created or enhanced as a result of the proposed transaction. There are no vertical links between them and also no risk of any conglomerate effects arising. The OFT therefore 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 any market or markets for goods or services in the United Kingdom.
This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.