Affected market: Fleet refurbishment services
The OFT’s decision on reference under section 23 given on 22 July 2009. Full text of decision published on 31 July 2009.
Please note that the square brackets indicate figures or text which have been deleted or replaced in ranges at the request of the parties or third parties for reasons of commercial confidentiality.
1. On the basis of the information available to it, the Office of Fair Trading (OFT) has decided that the completed acquisition of the car fleet refurbishment business of the Camden Group by Paragon Automotive Limited does not qualify for investigation under the mergers provisions of the Enterprise Act 2002 (the Act), because it does not believe that it is or may be the case that either the turnover test or the share of supply test in section 23 of the Act is met.
2. The annual UK turnover of the car fleet refurbishment business of the Camden Group was £[25-30] million. Therefore, the turnover test is not met.
3. On the basis of the information obtained from its enquiries, the OFT has not received any evidence that the share of supply test, as set out in section 23 subsections (3) and/or (4) of the Act, is met on any reasonable basis.
4. The parties provided the OFT with estimates of the total number of daily rental cars they were contracted to service. When compared to the total number of daily rental cars in the UK, the parties' share of supply was estimated to be [15 to 16] per cent. That being the case, the OFT was not able to assert jurisdiction on the basis of 'refurbishment services to daily rental cars'.
5. The OFT considered a more narrow description of services comprising the supply of 'end of life' refurbishment services to daily car rental fleets. The parties were unable to provide precise evidence of the exact size of the market for the supply of these services. However, the OFT did not find any evidence to suggest that the fleets that the parties were contracted to service would require significantly more 'end of life' services than fleets refurbished by other service providers - such that the parties' share of supply would exceed 25 per cent. Indeed, one third party argued that all daily rental cars underwent end of life services due to contractual obligations. In this case, the market size would be as large as the total rental fleet and the parties' share of supply would be [15-16] per cent. [note 1]
6. Overall, therefore, the OFT does not consider it realistic that the parties' share of supply of 'end of life refurbishment services to daily rental cars' would be significantly greater than that estimated with regard to 'refurbishment services to daily rental cars' so as to pass the 25 per cent threshold.
7. Therefore, the OFT does not believe that it is or may be the case that a relevant merger situation has been created.
- One rental company informed the OFT that the parties supplied a very significant proportion of its 'end of life' refurbishment services and, on the assumption that the parties supplied other rental companies, was confident that the share of supply test under section 23 of the Act was met on this basis. However, this third party was not able to substantiate its proposition with any additional evidence on the parties' overall share of supply of these services, and the OFT did not obtain any additional information in support of this third party's proposition during its inquiries.