Bowling merger may give rise to competition concerns
Original Bowling Company’s proposed acquisition of Bowlplex will be referred for an in-depth investigation unless acceptable undertakings are offered.
The Competition and Markets Authority (CMA) has found that The Original Bowling Company Ltd’s (TOBC) acquisition of Bowlplex Ltd (Bowlplex) may result in a substantial lessening of competition.
The CMA’s competition concerns focus on 6 local areas where the companies both run ten-pin bowling facilities – Bristol, Bracknell, Cardiff, Dudley, Leeds/Castleford and Glasgow.
The CMA considered a range of evidence in reaching its decision, including the extent to which TOBC and Bowlplex compete for customers in a given local area, the presence and strength of alternative ten-pin bowling options, and the companies’ incentive to increase prices following a merger.
The evidence available to the CMA suggests that, in local markets in Bristol, Bracknell, Cardiff, Dudley, Leeds/Castleford and Glasgow, the companies compete closely and that there may be insufficient competition from alternative ten-pin bowling providers to replace that lost as a result of the merger.
The CMA did not find any competition concerns in other areas of the UK where the companies’ activities overlap.
TOBC now has 5 working days in which it can offer undertakings to resolve the CMA’s competition concerns.
Sheldon Mills, CMA Senior Director of Mergers and decision-maker in this case, said:
Bowling is a popular and growing leisure activity in the UK enjoyed by many families and individuals. This merger brings together 2 of the largest national chains in the sector, The Original Bowling Company and Bowlplex. In 6 local areas, where the companies’ bowling centres are competing closely, we are concerned that after the merger there will be insufficient competition from other bowling operators in the area to prevent higher prices or lower service levels.
We therefore propose to refer the merger for an in-depth investigation unless TOBC offers a clear-cut remedy to address our competition concerns.
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law.
- Under the Enterprise Act 2002 (the Act) the CMA has a duty to make a merger reference, resulting in an in-depth phase 2 merger investigation, if it believes that it is or may be the case that a ‘relevant merger situation’ has been created, or arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and that the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
- Under the Act a ‘relevant merger situation’ is created if 2 or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million (‘the turnover test’) or as a result of the transaction, in relation to the supply of goods or services of any description, a 25% share of supply in the UK (or a substantial part of the UK) is created or enhanced (‘the share of supply test’).
- The CMA considers that it is under a duty to make a phase 2 merger reference in this case under section 33(1) of the Act. However, the duty to refer is not exercised while the CMA is considering whether to accept undertakings in lieu of a reference. TOBC has until 24 August 2015 to offer an undertaking to the CMA that might be accepted by the CMA. If no undertaking is offered or accepted, then the CMA will by 1 September 2015 refer the merger for a phase 2 merger investigation. All the CMA’s functions in phase 2 merger investigations are performed by inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision-makers on merger investigations. The CMA’s panel members come from a variety of backgrounds, including economics, law, accountancy and/or business; the membership of an inquiry group usually reflects a mix of expertise and experience (including industry experience).
- The text of this decision will be placed on the case page as soon as is reasonably practicable.
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