Affected market: Construction
OFT's decision on reference under section 22 given on 21 September
Volker Wessels UK Limited (Volker Wessels) is a subsidiary of the
Dutch company Royal Volker Wessels Stevin NV and involved in the design,
development, realisation and management of building projects. It is
active in road maintenance through its subsidiary John Crowley.
Fitzpatrick Plc (Fitzpatrick) undertakes projects and performs
services in the construction industry, including civil engineering,
building, highway services and facility maintenance. The UK turnover of
Fitzpatrick for the year ended 31 December 2003 was £224.8 million.
On 17 May 2004 Volker Wessels acquired all issued shares in
Fitzpatrick's parent company Pearlpeace Limited. The extended statutory
deadline is 29 September 2004 and the administrative timetable expires
on 6 October 2004.
As a result of this transaction Volker Wessels and Fitzpatrick have
ceased to be distinct. The UK turnover of Fitzpatrick 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.
Volker Wessels submitted that the parties only overlap in the supply of
road maintenance, which has been confirmed by third parties. Volker
Wessels is active in this field through its subsidiary John Crowley.
Road maintenance incorporates all elements of carriageway construction
including road and footway.
The parties and third party responses indicate that the relevant frame
of reference for this assessment is considered as road maintenance.
Volker Wessels submitted that suppliers of road maintenance compete both
on a local and national level. Tenders may be on a small scale e.g. a
single London borough or large scale, e.g. a county. There appear to be
no constraints on contractors to bid in a region other than where they
are located. However, as John Crowley's geographic area is limited to
the South East of England the local overlap will also be considered for
the purpose of this assessment. The relevant frames of reference are
therefore confined to the local and national supply of road maintenance.
On the basis of the data estimated by the parties, post-merger, the
parties combined share of supply for the UK supply of road maintenance
is 3.33 per cent (increment 1.05 per cent).
Volker Wessels submits that it is unable to provide competitors' shares
of supply but maintains that they are likely to exceed those of the
merging parties. Responses from third parties agree that there is a wide
choice of suppliers available. The parties also submitted, and this was
confirmed by third parties, that pre-merger they bid for different types
For completeness, local issues are
considered as John Crowley's geographic area is limited to the South
East of England where Fitzpatrick is also active. John Crowley estimates
its supply of road maintenance in the South East to amount to 2.58 per
cent of the South East supply and Fitzpatrick's to 2.4 per cent. On the
basis of these estimates, post-merger, the parties' combined share of
supply for the South Eastern region of road maintenance is 4.98 per cent
(increment 2.4 per cent). A large number of alternative suppliers are
available and no third parties raised any concerns.
THIRD PARTY VIEWS
Third parties had no concerns and all submitted that there are numerous
suppliers active in road maintenance on a national level and in the
The transaction qualifies on the turnover test pursuant to section 23(1)
(b) of the Act. The relevant frames of reference are considered to be
the local and national supply of road maintenance.
Locally, post-merger, the combined share of supply for the South Eastern
region of road maintenance is 4.98 per cent (increment 2.4 per cent).
Furthermore, nationally for the UK supply of road maintenance the
parties combined share of supply amounts to 3.33 per cent (increment
1.05 per cent). No third parties raised any competition concerns and
there are numerous additional suppliers active in this sector on both
the local and national level.
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 33(1) of the