Affected market: Oil rig services
The OFT's decision on reference under section 33(1) given on 29
February 2008. Full text of decision published on 6 March 2008.
Turbo Alpha Limited (‘Turbo Alpha’) is a company owned by a fund,
FR XI-D Offshore AIV, L.P. which is ultimately controlled by FR XI
Offshore GP Limited and is advised by First Reserve Corporation. Turbo
Alpha was set up for the purpose of purchasing Abbot Group plc. One of
the portfolio companies controlled by the investments funds advised by
First Reserve Corporation, the Acteon Group Limited [See note 1]
(‘Acteon Group’), is active in a broadly similar sector to the target company.
The bulk of Acteon Group’s services are specialist engineering services, in
particular subsea and marine services such as the anchoring and mooring of
offshore oil and gas rigs.
Abbot Group plc (‘Abbot Group’) designs, constructs and operates oil rigs as
main contractor (both onshore and offshore) mainly through its subsidiary
KCA Deutag. In the last financial year the Abbot Group’s UK turnover was
approximately £100 million.
Turbo Alpha will acquire Abbot Group by a scheme of arrangement. The
parties notified the transaction on 4 February 2008 by a Merger Notice
and the statutory deadline is 3 March 2008.
As a result of this transaction Abbot Group and Turbo Alpha will cease
to be distinct. The UK turnover of Abbot Group 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
arrangements are in progress which, if carried into effect, will result
in the creation of a relevant merger situation.
The bulk of Abbot Group’s revenue is generated from designing,
constructing and operating oil and gas rigs (both onshore and offshore),
often as the main contractor. It typically provides a rig and a crew to
an operating company (such as an oil or gas exploration company), and
will drill wells to the depth and specifications set by that operator.
The bulk of the Acteon Group’s services are specialist engineering
services, in particular subsea and marine services such as the anchoring
and mooring of offshore oil and gas rigs. These services are not
provided by the Abbot Group, which does not have the marine and
structural engineering expertise that is required to provide these
The activities of the Acteon Group and the Abbot Group are broadly
complementary (in that both parties provide services in the oil and gas
exploration sector), but the OFT has found no evidence of any overlap
between their activities and as a result no horizontal competition
concerns are considered to arise.
The Acteon Group and Abbot Group do not operate at different levels of
the supply chain in the oil and gas exploration sector, and so the
merger does not give rise to any vertical issues.
In the absence of any horizontal or vertical overlap between the
parties, the OFT has not considered it necessary to define the markets
in which each party operates.
Consideration was given to the potential conglomerate effects of this
transaction, in particular through the bundling of good and services.
The parties submitted that they had no intention of bundling their
products and services and that differences between each of their
offerings made bundling inappropriate [See note 2]. No third party
concerns of this nature were raised and one third party confirmed
that the products and services each party offers are too varied to allow bundling.
None of the third parties, both customers and competitors, contacted by
the OFT in course of its investigation raised any concerns about the
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 33(1) of the Act.
- The main subsidiaries of Acteon Group are: 2H Offshore Engineering
Limited, Aquatic Engineering & Construction Limited, Chain
Corporation and Construction Limited, Conductor Installation Services
Limited, Claxton Engineering Services Limited, International Mooring
Systems Limited, InterAct PMTI Inc., InterMoor Inc., MENCK GmbH, Mirage
Machines Limited, Seatronics Limited, TEAM Energy Resources Limited,
Trident Offshore Limited, UWG Limited, WellCut Group Inc.
- Acteon Group provides subsea products and services to offshore oil
and gas facilities. Acteon Group's products and services are provided
either before or after the provision of drilling contracting. These
products and services are not related to the provision of drilling
contracting or to the manufacture of land drilling rigs. KCA Deutag
provides contract drilling services, which are not related to the
provision of subsea products and services.