Portman Building Society / Staffordshire Building Society

OFT closed case: Anticipated acquisition by Portman Building Society of Staffordshire Building Society.

Affected market: Financial services

No. ME/1250/03

The OFT's decision on reference under section 33 given on 22 July 2003


Portman Building Society (Portman) is a building society providing various financial services including mortgages, insurance, savings, financial planning and share dealing. Staffordshire Building Society (Staffordshire) provides a similar range of financial services. For the year ended 31 December 2002 Staffordshire had a UK turnover of £83.7 million.


Portman proposes to merge with Staffordshire. The parties notified on Tuesday 24 June with a statutory merger notice. The 20 day statutory deadline (which has not been extended) will expire on Tuesday 22 July 2003.


As a result of this transaction Portman and Staffordshire will cease to be distinct. The UK turnover of Staffordshire exceeds £70 million, so that the turnover test in section 23(1)(b) of the Enterprise Act 2002 is satisfied.  A relevant merger situation has been created.

Relevant market

Product market

The relevant frames of reference for analysis are the provision of mortgage loans, savings accounts, current accounts, personal loans, credit cards and other financial services products to personal customers. Many financial products provided to the retail sector in the UK are close substitutes (demand and supply sides) by virtue of their price, characteristics and use.  It has not been necessary to come to a conclusion in this area.

Geographic market

The geographic frame of reference is considered to be the UK.

Horizontal issues

The parties overlap in the provision of mortgage loans and savings accounts. The parties combined share of supply for mortgage loans will be less than 1.5 per cent (see [note 1]) and for savings accounts will be less than 2 per cent  (see [note 2]). The overlap in the network of branches of the parties is limited to one branch in the West Midlands.

Barriers to entry and expansion

The provision of retail financial services, including the mortgage and savings services sectors, is a competitive and highly fragmented area. In particular existing providers may switch resources quickly and with minimal sunk costs in order to provide the products supplied by the merged parties.

Buyer power

As the majority of customers in these sectors are individuals, buyer power is likely to be low.


There are no vertical issues raised by the anticipated transaction.


There were no responses to the public invitation to comment issued on 25 June 2003. No other third parties expressed any concerns regarding the anticipated merger.


The anticipated merger qualifies under the turnover test of the Act.  The parties overlap in the provision of mortgage loans and savings accounts with a combined share of supply no greater than 2 per cent. There is minimal geographic overlap in the parties' branches and barriers to entry and expansion are considered low. No concerns were raised by third parties regarding the anticipated transaction.

The merger does not appear to result in a substantial lessening of competition within a market or markets in the United Kingdom for goods or services.


This merger will therefore not be referred to the Competition Commission under section 33(1) of the Act.


Council of Mortgage Lenders Market Briefing, June 2003, Table 11 (data by Bank of England). Ibid, Table 32.

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