Press release

CMA provisionally clears merger of toy companies

The CMA has provisionally found that VTech’s acquisition of LeapFrog will not lead to competition concerns.

Child playing with tablet

VTech Holdings Ltd (VTech) acquired LeapFrog Enterprises, Inc. (LeapFrog) in April 2016. Before the merger, they were 2 of the leading suppliers of learning toys, child tablets and content in the UK.

The Competition and Markets Authority (CMA) started its initial investigation into the merger in April 2016. On 30 August 2016, the merger was referred for an in-depth inquiry.

A group of independent panel members investigating the merger has provisionally found that the merger may not be expected to result in a substantial lessening of competition in the supply of learning toys for 0 to 5 year olds. The group found that while the companies were close competitors, there are numerous other credible suppliers, and VTech and LeapFrog were not each other’s closest competitor.

The group also found that although LeapFrog and VTech were close competitors in child tablets and content, the market is evolving rapidly with new entrants and an increasing number of alternatives available for child-appropriate content on electronic devices. Therefore the group also found that the merger may not be expected to result in a substantial lessening of competition in the supply of these products.

Lastly, the group also provisionally found that the merger may not be expected to result in a substantial lessening of competition in future innovation in toys.

Philip Marsden, Inquiry Chair, said:

We looked carefully at competition in the evolving and innovative toy industry, and in particular at learning toys and child tablets, to make sure this merger would not reduce choice for consumers or lead to higher prices. As part of our inquiry, we obtained the views of consumers as well as those of high street and online toy retailers, and other toy manufacturers.

We are satisfied that even after the merger there will be a sufficient variety of learning toys for 0 to 5 year olds available. We also found that the child tablet market is evolving rapidly with increasing choice available for people who want to buy electronic devices and content suitable for their children.

We’re now asking for views on these provisional findings and will assess all the evidence before making a final decision.

All information relating to this merger inquiry can be found on the case page.

Anyone wishing to respond to the provisional findings should do so in writing, by no later than 12pm on 4 January 2017.

Please email vtech.leapfrog@cma.gsi.gov.uk or write to:

Project Manager
VTech/LeapFrog merger inquiry
Competition and Markets Authority
Victoria House
Southampton Row
London
WC1B 4AD

Notes for editors

  1. 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.
  2. The summary of provisional findings can be found on the case page. The full report will be published shortly.
  3. The CMA referred the case for in-depth investigation on 30 August 2016.
  4. The members of the inquiry group are: Philip Marsden (Inquiry Chair), Lesley Ainsworth, Graham Sharp and Jon Stern.
  5. All the CMA’s functions in phase 2 merger inquiries are performed by independent inquiry groups chosen from the CMA’s panel members. The appointed inquiry group are the decision-makers on phase 2 inquiries.
  6. 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.
  7. For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk, Flickr and LinkedIn and like our Facebook page. Sign up to our email alerts to receive updates on mergers cases.
  8. Media Enquiries should be directed to Neil Kernohan (neil.kernohan@cma.gsi.gov.uk, 020 3738 6170).
Published 9 December 2016