TBH Retail Ltd / USC Group plc

OFT closed case: Completed acquisition by TBH Retail Limited of USC Group plc.

Affected market: Clothing and footwear retail

No. ME/1233/04

The OFT's decision on reference under section 22 given on 23 September 2004


TBH Retail Limited (TBH) is a clothing and footwear retailer owned 100 per cent by TBH Trading Limited, which is in turn owned 100 per cent by West Coast Capital. High street retail interests of TBH include 91.5 per cent of Office Holdings Limited (trading under the names Office and d2), 60 per cent of AJT Limited, 25 per cent of New Gadget Shop Limited and 100 per cent of Birthdays.

USC Group plc (USC) is a clothing and footwear retailer. USC's UK turnover for the last financial year was about £100,000,000.


On 26 May 2004 TBH acquired the entire issued ordinary share capital of USC. The parties notified the transaction on 10 August 2004 and the statutory deadline is 25 September 2004.


As a result of this transaction TBH and USC have ceased to be distinct. The UK turnover of USC 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 the case that a relevant merger situation has been created.


The parties overlap in the supply of clothing and footwear sold in the high street through their USC, d2 and Office outlets.

Product market

The parties submit that the relevant product market is the supply of branded lifestyle clothing and footwear sold in the high street. The typical consumers for such items are aged between 15-30. The parties overlap in this sector through their high street shops USC, d2 and Office. USC and d2 both retail branded fashion clothing and footwear for men and women. Office only sells footwear. Given no competition concerns arise at even the narrowest level, it has not been necessary to conclude on the product market definition. The effect of the transaction on the supply of both branded lifestyle clothing and fashion footwear has been examined.

Geographic market

As with many retailing cases, there are both national and local aspects of competition. USC's prices are set nationally and reduced at sales time and to clear slow moving product on an ad hoc basis. USC claims it does not tend to respond aggressively to local pricing by competitors, relying more on the exclusivity of the brands. Office sells a combination of branded and own product and has a similar pricing policy to USC. d2 is a value retailer of own brand and lower end branded clothing. It states that it sets its prices with a mind to what the competition are offering on a national basis and is unlikely to alter prices on a regional level in response to local competition.

The parties submit that the distance a customer is willing to travel to visit their stores varies depending on where the stores are located. Smaller stores, located in smaller towns, principally attract custom from that town and the immediate surrounding areas. Larger stores would have a larger catchment area since the majority are in prime shopping areas of large towns which attract customers from a wide area.

The effect of the merger has been analysed at both a national and local level.


Market shares

The parties estimate that their combined share of supply at a national level for national branded lifestyle clothing sold in the high street is approximately 0.6 per cent and their share of supply for national footwear is approximately 3.5 per cent.

There are USC outlets in 37 towns but of these, only three also have a d2 and Office outlet: East Kilbride, Inverness and Stirling. In each of these locations, there are a host of other shops with similar fashion clothing and footwear offerings. The Office has no reason to believe that the position is different to any material degree in the 19 towns where there is either a d2 or Office outlet in addition to a USC shop.

Barriers to entry and expansion

The parties submit that barriers to entry and expansion are low. A standard branch of d2 or Office of around 2000 square feet would cost approximately £200,000 for shop fitting and another £200,000 for stock. Given the lack of horizontal issues in this case, it is not necessary to reach a firm conclusion on barriers to entry.

Buyer power

Buyers are individual consumers and do not have any countervailing buyer power.


Neither USC nor TBH has any structural links with suppliers further up the supply chain. Given the low shares of supply involved in this transaction, TBH is not judged to have significant buyer power as a retailer and the acquisition is not expected to materially increase any buyer power it may have.


None of the third parties contacted raised any competition concerns.


The parties' shares of supply at a national level are extremely small on even the narrowest product market definition and they face competition from numerous other clothing and footwear retailers at a local level. The merger does not raise competition concerns.

Consequently, the OFT does not believe that it is or may be the case that the merger 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.

Published 22 September 2004