Affected market: Storage solutions
The OFT’s decision on reference under section 22 given on 30 June 2006.
Full text published 10 July 2006.
Please note that the square brackets indicate figures or text which
have been deleted or replaced with a range at the request of the parties
for reasons of commercial confidentiality.
Tidy Acquisitions Co Ltd (Tidy) is a newly incorporated company
established for the purpose of this acquisition (see [Note 1]). It is
majority-owned by Stirling Square Capital Partners IV (SSCP), an
Whittan Group Limited (Whittan) is a UK-based provider of storage
products and storage solutions (see [Note 2]). Its UK turnover
for the financial year ended in March 2005 was £[ ] million.
SSCP investment funds currently control three portfolio companies. The
only company controlled by SSCP whose activities overlap with Whittan’s
is Schoeller Arca Systems N.V. (Schoeller), a supplier of plastic
Tidy acquired Whittan in February 2006. The OFT’s administrative
deadline for deciding whether to refer the merger to the Competition
Commission is 3 July 2006 and the statutory deadline is 9 August 2006.
As a result of this transaction Tidy and Whittan have ceased to be
distinct. The UK turnover of Whittan exceeds £70 million, so the
turnover test in section 23(1)(b) of the Enterprise Act 2002 (the Act)
is satisfied. The OFT therefore believes that it is or may be the case
that a relevant merger situation has been created.
FRAME OF REFERENCE
The parties overlap in the supply of storage solutions which comprise
various plastic containers, bins and drawers of different sizes and
shapes, as well as louvred panels and metal feeder trolleys. These
products can be sold separately or as complete units, and are marketed
by both Whittan and Schoeller on their websites as ‘small parts storage
solutions’. In this paper the term ‘small parts storage solutions’
(SPSS) is used to refer to the particular type of storage products in
which the parties overlap.
SPSS are used for storing a large range of small parts such as screws,
springs, nuts and bolts, small tools, office supplies, electronic
components, domestic gadgets, etc. The containers or bins which are part
of SPSS can be made of a variety of materials, including prefabricated
steel, injection-moulded plastic, wood and composite materials. Whittan
and Schoeller only overlap in the supply of SPSS which comprise bins and
containers made of plastic.
Whittan does not manufacture SPSS itself; it sources both the plastic
components (i.e. containers and bins) and metalwork (i.e. louvred panels
and feeder trolleys) from third parties. Schoeller manufactures the
plastic elements for its SPSS in-house, but sources the metalwork from a
The parties submitted that all storage solutions that hold or allow the
storage of small items, whatever the materials they are made of, are
demand-side substitutes. This view was not supported by customer
opinion. On the supply side, the parties argued the product scope could
be broadened to either part of a wider injection-moulded standard
plastic components and prefabricated steel components market, of which
the storage industry is a small user, or part of wider
all-storage-solutions encompassing frame of reference. However, they did
not provide enough evidence to support this view and, although one third
party supported it, others submitted that it would not be profitable to
switch production in response to a 5-10 per cent increase in price of
Due to the lack of evidence on demand and supply side substitution, the
OFT has focused its analysis on the precise type of products in which
Whittan and Schoeller overlap: SPSS in which containers and bins are
made of plastic (hereafter ‘plastic SPSS’). Given that the merger does
not raise any competition concerns even when assessed against this very
narrow frame of reference, it is not necessary to reach a conclusion on
whether the product scope should be any wider.
The parties submit that the geographic scope is European, on the basis
that both Whittan and Schoeller distribute plastic SPSS across Europe.
However, the majority of third parties contacted submitted that some
kind of UK presence is required in order to supply UK customers, in
particular to ensure timely delivery and in some cases to provide design
assistance and project management services. Indeed, none of the UK
customers contacted sourced SPSS from suppliers that do not have some
kind of presence in the UK. In addition, the evidence the OFT has found
indicates that transport costs are high. The OFT therefore considers the
UK as the appropriate geographic frame of reference.
The parties estimate that the UK market for plastic SPSS is worth at
least £[8-12] million, which gives them a combined share of supply of
[5-15] per cent (increment [0-5] per cent). They submitted it is
difficult to estimate competitors' shares of supply, but according to
third party comments there are a large number of suppliers of plastic
SPSS. Although the products supplied by different manufacturers may
differ slightly (e.g. the colour and the thickness of the plastic may
vary), a number of them supply essentially the same kind of product.
Customers told the OFT that there are no costs involved in switching
plastic SPSS suppliers.
Whittan and Schoeller focus their activities on different types of
storage products; while Whittan is primarily a supplier of metal pallet
racking, metal shelving and metal personal lockers, Shroeller produces
pallets, pails, crates for beverage and material handling, PET preforms,
caps and closures. Although Whittan and Schoeller’s product lines could
be seen as complementary, one third party told the OFT that it is
unlikely that a customer would demand the full portfolio of products
supplied by Whittan and Schoeller and that customers currently
multi-source their storage solutions from a number of suppliers.
THIRD PARTY VIEWS
All third parties contacted were unconcerned about this merger.
Even adopting a very narrow product frame of reference, Whittan and
Schoeller's combined share of supply resulting from the merger is low
at [5-15] per cent, a large number of alternative suppliers will
remain and third party customers have confirmed that it is easy to
switch suppliers. In addition, customers and competitors of Whittan and
Schoeller did not raise any concerns about the transaction.
Consequently, 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
This merger will therefore not be referred to the Competition Commission
under section 22(1) of the Act.
- Co Ltd is now Whittan Acquistions Co Ltd.
- Group Ltd is now Whittan Investments Ltd.