Affected market: Energy
The OFT’s decision on reference under section 33(1) given on 16 June
2005. Full text of decision published 17June 2005.
Kellen Acquisitions Ltd (Kellen) is a private company incorporated
in England & Wales for the purposes of acquiring ESH. Kellen is
owned by funds managed by Terra Firma Investments 2 (GP) Ltd, a company
ultimately controlled by Terra Firma Capital Partners Holdings Ltd
(Terra Firma), a private equity firm. At time of notification, none of
the companies in Terra Firma’s existing investment portfolio carry on a
business activity in the electricity, gas or water industry (see [note
East Surrey Holdings plc (ESH) is a public limited company with
three main operations through various subsidiaries: the conveyance and
supply of gas in the Greater Belfast area; gas connections
and transportation in Great Britain; and the supply of drinking water to
certain London boroughs and parts of Kent and Sussex.
Kellen will acquire the whole of the share capital of ESH. The
40-working day administrative timetable expires on 11 July 2005.
As a result of this transaction Kellen and ESH will cease to be
distinct. For the financial year ended 31 March 2004, the UK turnover of
ESH was around £73 million. The UK turnover of ESH thus exceeds £70
million, so the turnover test in section 23(1)(b) of the Enterprise Act
2002 is satisfied. Arrangements are in progress or contemplation which,
if carried into effect, will result in the creation of a relevant merger
Sutton and East Surrey Water plc, an ESH subsidiary, is a water
enterprise for the purposes of the Water Industry Act 1991 (WIA). A
mandatory reference under section 32 of the WIA is not triggered as only
one water enterprise is involved in this transaction.
Since none of the activities of the Terra Firma funds give rise to any
overlap between the business activities of ESH, 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 33(1) of the Act.
1. The recently completed acquisition by Terra Firma of the entire share
capital of British Gas Connections Limited has not been taken into
account in this assessment and will be assessed separately by the OFT.