Eagle Retail Investments Ltd / Early Learning Centre

OFT closed case: Completed acquisition by Eagle Retail Investments Ltd of Early Learning Centre.

Affected market: Retail of Children's toys and games

No. ME/1006/04

The OFT's decision on reference under section 22 given on 12 May 2004.


Eagle Retail Investments Ltd (Eagle) is a newly incorporated company. The principal shareholders in Eagle Retail Investments Limited include DC Thomson & Co Ltd and other investors, and a management team including Tim Waterstone. Chelsea Stores Ltd, a subsidiary of Eagle (see [note 1]), is a retailer of children's toys, clothes and shoes, and nursery products through five retail outlets under the name of 'Daisy and Tom'. DC Thomson & Co Ltd is a publisher of newspapers, magazines and comics. It is not active in the manufacture or retail of children's toys.

Early Learning Holdings Ltd (ELH) is the parent company of Early Learning Centre (ELC). ELC manufacture and retail children's toys in the UK. ELH reported a UK turnover of £164.7 million for the year ending 3 May 2003.


Eagle acquired 100 per cent of the issued share capital of ELH on 2 April 2004. The transaction was notified on 13 April 2004. The statutory deadline expires on 1 August 2004 and the 40 day administrative deadline is 10 June 2004.


As a result of this transaction Eagle and ELH have ceased to be distinct. The UK turnover of ELC 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 has been created.


The parties overlap in the supply of children's toys and games in the UK. ELC and Chelsea Stores are active in the retailing of traditional toys and games in the UK. This segment was estimated by Keynote Limited to be worth approximately £2.0 billion per annum, of which the pre-school sector accounts for some 60 per cent. These figures exclude the electronic games, video and book segments, which are estimated to be worth a further £1.6 billion.


ELC is active in the 0-6 years pre school toy sector. NPD Consumer Panel data estimates that ELC's share of supply of the total UK toy retail sector for the year to December 2002 was approximately 8.6 per cent and that its share for the 0-6 years pre school toy retail sector for the same period was 13.2 per cent.

Chelsea Stores share of supply for the retail sales of toys in the UK is estimated to be less than 1 per cent. Its sales of children's clothes are estimated to be less than 0.1 per cent of the total supply UK clothes and shoes.

Barriers to entry and expansion

Barriers to entry at retail level are considered to be low, particularly given the emergence of supermarkets selling children's toys and, over the last decade, the development of toy superstores.

Buyer power

The main customers are consumers, who do not have any individual buyer power.


ELC manufactures own brand toys, sales of which account for some [ ] per cent (see [note 2]) of its turnover. NPD Consumer Panel data estimates that ELC's share of supply in the UK pre-school market, expressed as a manufacturer, was 11.5 per cent for 2002. Given this low share of supply, no increment and lack of concern from third parties, vertical issues are negligible.


Of the third parties' contacted – both customers and competitors – none raised any concerns about the merger. The Consumers Association viewed it as being positive.


Given the parties relatively small shares of supply, the OFT does not believe that it is or may be the case that the merger has resulted or 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.


1.Ownership of Chelsea Stores was transferred to Eagle on 2 April 2004. Previously, it had been partially owned by Tim Waterstone, DC Thomson and other investors. 2. Actual figures replaced by a range, or deleted for reasons of commercial confidentiality.

Published 11 May 2004