OFT closed case: Completed acquisition by Caisse du dépôt et placement du Québec of a 25 per cent stake in Interconnector (UK) Limited
Affected market: Gas, offshore pipeline laying
The OFT’s decision on reference under section 22(1) given on 31 July 2007. Full text of decision published 8 August 2007.
Caisse du dépôt et placement du Québec (CDPQ) is the largest institutional fund manager in Canada. Ultimate control of CDPQ is maintained by the board of CDPQ, which is appointed by the Government of Québec.
Interconnector (UK) Limited (IUK) is a UK company, which operates a sub-sea gas pipeline and terminal facilities to provide a link between the UK and Continental European energy markets. All shareholders in IUK other than CDPQ are major international energy companies (E.ON Ruhrgas, Distrigas, Conoco Philips, Gazprom, Total, ENI). IUK’s turnover in the year to 30 September 2006 was £116.9 million.
On 22 June 2007, CDPQ acquired from British Gas plc a 25 per cent equity stake in IUK. The parties notified the transaction on 22 June 2007 and an administrative deadline of 17 August 2007 applies.
The OFT believes that it is or may be the case that a relevant merger situation has been created because:
- CDPQ and IUK have come under common control for the purpose of section 26 of the Enterprise Act 2002 (the Act) as a result of CDPQ acquiring the ability materially to influence the policy of IUK and, as a consequence, CDPQ and IUK have ceased to be distinct for the purpose of section 23 of the Act, and
- The UK turnover of IUK exceeds £70 million, so the turnover test in section 23(1)(b) of the Act is satisfied.
The OFT considers that CDPQ has (or at least may have) acquired material influence over IUK on the basis that CDPQ's 25 per cent shareholding in IUK may be likely, in practice, to give the former the ability to block special resolutions at IUK shareholders' meetings. Consistent with the OFT's Guidance, such a shareholding is likely to be seen as presumptively conferring material influence [see note 1].
IUK owns and operates a 235 kilometre sub-sea pipeline between the UK and Belgium as well as associated terminal and compressor facilities. CDPQ manages funds primarily for public and private sector pension and insurance plans. It has no interest in any company active in the European gas or power sector other than through minority investments or funds in which it is a passive investor.
There is little or no overlap between the parties' activities, and third parties have not raised any competition concerns regarding the transaction. 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 22(1) of the Act.
- See Mergers Substantive Assessment Guidance, paragraph 2.10.