BICC plc and Sterling Greengate Cable Company Ltd: A report on the merger situation

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On 14 March 1990 the Secretary of State for Trade and Industry asked us to investigate the merger between BICC plc (BICC) and Sterling Greengate Cable Company Ltd (Sterling Greengate) (see Appendix 1.1).

BICC is the largest cablemaker in the United Kingdom and is a major international engineering business. Its turnover in 1989 was £3.8 billion, within which United Kingdom sales of cables were £458 million. Sterling Greengate is a much smaller company. It is the sixth largest cablemaker in the United Kingdom, with most of its production being of mains, elastomeric wiring or PVC armoured wiring cables. Its turnover in 1989 was £43 million.

Sterling Greengate was a wholly-owned subsidiary of Raytheon United Kingdom Ltd (Raytheon). BICC acquired Sterling Greengate in December 1989, after Raytheon had put the company up for sale.

In considering whether the merger operates, or may be expected to operate, against the public interest, the main issue we considered was whether the merger would reduce competition in the three markets where there is an overlap between the products made by BICC and by Sterling Greengate, namely mains, elastomeric wiring and PVC armoured wiring cables. In the three markets, based on 1989 figures, the combined market shares would be for mains cables 35 per cent, for elastomeric wiring cables 37 per cent and for PVC armoured wiring cables 23 per cent.

The effect of the merger would be to take the only remaining medium-sized supplier of power cables out of the market. However, in each of the three markets in which the production of BICC and Sterling Greengate overlapped, at least three major United Kingdom competitors would remain after the merger. We considered that if Sterling Greengate had remained independent, it was unlikely to have had sufficient underlying strength to remain a competitive force in the longer term, taking into account the likely changes in the pattern of demand.

The existence of substantial and knowledgeable buyers and the potential for increased imports would also, we concluded, help to ensure that the markets remained competitive. We received little evidence from users or customers that the removal of Sterling Greengate as a separate enterprise would materially damage competition or significantly affect prices or customer service. We concluded that there was no likelihood of a materially adverse effect from the merger in any of the three markets.

We therefore concluded that the merger might not be expected to operate against the public interest.

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