RANSOMES plc and Cushman Inc, Brouwer Equipment Inc and Brouwer Turf Equipment Ltd: A report on the merger situation

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On 19 March 1990 the Secretary of State for Trade and Industry asked the MMC (Appendix 1.1) to investigate and report on the acquisition of the Cushman Group (Cushman Inc, Brouwer Equipment Inc and Brouwer Turf Equipment Ltd) by RANSOMES plc (Ransomes). This reference to us was made in view of the possible effects on competition in the market for commercial grass-care equipment. The Cushman Group manufactures commercial grass-care equipment and light industrial and commercial vehicles in the United States and Canada and sells its products world-wide. Ransomes' main business is the manufacture and distribution of domestic and commercial grass-care machinery in the United Kingdom, North America and continental Europe.

Commercial grass-care equipment is divided into three distinct markets: grass-cutting equipment, worth about £42 million in 1989; turf-maintenance equipment, worth some £10 million; and turf-harvesting equipment, worth about £1 million. In this last market there has been no increase in concentration and there is no other cause for concern. Of the other two markets, the merger has resulted in an increase in concentration only in the commercial grass-cutting equipment market. Ransomes was the largest supplier with a 32 per cent share of this market by value in 1989. The Cushman Group's share was 2 per cent. By the acquisition, Ransomes has increased its share to 34 per cent. A number of mainly international firms compete in this market and new firms continue to enter the market. In the circumstances of this market we do not view Ransomes' small increase in market share as material.

In addition to its leading position in the grass-cutting equipment market, Ransomes now has an 11 per cent share of the turf-maintenance equipment market. We considered the effect of Ransomes' enhanced position in these two related markets and, in particular, the impact of Ransomes' decision to use its dealer network to sell Cushman Group products.

Customers generally obtain their equipment from a number of suppliers and are used to owning different makes of equipment. There are no signs that this will change. Ransomes dealers currently sell equipment of other suppliers but are likely to be less willing to handle this equipment in future, unless particular products fill a gap in the enlarged Ransomes/Cushman range. We judge that the likely impact of this will be small. There are other dealers to whom these suppliers can turn.

The merger has not enlarged Ransomes' dealer network, although the extended product range may have strengthened it. The strength of this dealer network reflects, in part, the attractiveness to dealers of acting for Ransomes with its popular range of machines and is not, in itself, a matter of concern. There are other actualand potential dealers to compete with Ransomes' dealers.

Ransomes' dealers rely heavily on Ransomes for their supplies of commercial grass-care equipment. They are, however, independent businesses usually with other interests and, on average, the sale of Ransomes products accounts for less than one-fifth of their total turnover. The relationship between Ransomes and its dealers is one of mutual dependency and we find that the overall balance in this mutual dependency has not been upset by the merger.

In these circumstances we consider that the merger will not adversely affect competition in the markets for commercial grass-care equipment either by reason of increased concentration in any one of these three markets or as a result of Ransomes' enhanced position in commercial grass-care equipment as a whole.

We conclude, therefore, that the merger should not be disturbed.

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