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11/02
26 February 2002
INQUIRY INTO THE ACQUISITION OF McKECHNIE PAXTON HOLDINGS
LIMITED BY LINPAC GROUP LIMITED
Statement of Hypothetical Remedies
The Competition Commission has sent a remedies letter,
on a purely hypothetical basis, to the Linpac Group Limited (Linpac),
as part of its inquiry into the acquisition by Linpac of McKechnie Paxton
Holdings Limited (Paxton).
This statement summarises the points on which views are
being sought. In particular, comments are invited on the likely effectiveness,
costs and practicability of the remedies that have been set out. It should
be clearly understood that the basis on which the points listed below
are being raised is entirely hypothetical. It does not imply that the
Commission has reached any conclusion on whether the acquisition is likely
to be against the public interest. It is being published now to give interested
parties as much time as possible to comment on the possible remedies that
the Commission may consider, consistent with maintaining the schedule
for the inquiry.
The Commission invites views on a number of hypothetical
remedies:
- a complete divestment of one or more of Linpac’s UK subsidiaries
operating in the markets for returnable transit packaging (RTP), or
a partial divestment of factories or operations relating to specific
products or services where adverse effects may be identified;
- a divestment, by Linpac, of vertically integrated logistics businesses
using RTP, and an undertaking, not to recreate any;
- an undertaking to make transparent to customers that Paxton is now
part of the Linpac group, and no longer a competitor;
- an undertaking that Linpac would not seek to enforce intellectual
property rights for various RTP products either, at all or for a limited
period of time only; and would make information on design and manufacture
freely available to competitors;
- undertakings relating to Linpac’s UK subsidiaries about the prices
of RTP and other plastic-based, transit packaging items. These could
take a number of forms, could be imposed for varying periods of time,
and could be adjusted for changes in raw material costs. Measures might
include:
- undertakings, on the part of the UK subsidiaries, relating to the
level of prices charged to customers, or to the mechanisms by which
they are set; and/or
- an undertaking that the UK subsidiaries would publish their prices
and/or notify all their customers of them.
Other remedies, which would go along with those listed
above, include:
- an undertaking to inform all customers of undertakings given;
- an undertaking to seek prior clearance from the OFT for further
acquisitions in any of the markets affected by the current acquisition;
- an undertaking to assist the OFT in monitoring compliance with behavioural
undertakings, including the provision of pricing data.
Responses
Comments are invited on the hypothetical remedies described
in this statement. It would be helpful if responses could be sent to the
Reference Secretary, Peter Radley, at the Competition Commission, New
Court, 48 Carey Street, London, WC2A 2JT (telephone 020 7271 0394, fax
020 7271 0203, e-mail linpac@competition-commission.gsi.gov.uk)
by Monday, 11 March.
Notes to editors
1. The reference was made by the Secretary of State for
Trade and Industry, under section 64(8) of the Fair Trading Act 1973,
on 4 January 2002 (see DTI press release P/2002/003).
- No conclusion will be reached about whether any matters operate or
may be expected to operate against the public interest until the Competition
Commission submits its report to the Secretary of State on 10 April
2002.
- The Statement of Issues were set out in Competition Commission News
Release 08/02, dated 12 February 2002.
- This inquiry is being undertaken by a group of five Commission members
and is led by Denise Kingsmill, one of the Commission’s two deputy
chairmen. The other members are Christopher Clarke, a former director
of HSBC Investment Banking, Dame Helena Shovelton, the Chief Executive
of the British Lung Foundation, Professor Catherine Waddams, Director
of the Centre for Competition and Regulation at the University of East
Anglia and Martyn Webster, former Group Managing Director of Southern
Water plc.
- Further information can be obtained from the Commission’s website
at www.competition-commission.org.uk/inquiries/ref.htm
- Enquiries should be directed to: Francis Royle, Press Officer (020
7271 0242).
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