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
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
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.