Skip to the page Primary Navigation Skip to the page content Skip to page Footer
The OFT closed on 31 March 2014 and this website is no longer being updated. The OFT's work and responsibilities have passed to a number of different bodies. Read more.

Completed acquisition by Inchcape plc of European Motor Holdings plc

Affected market: Car dealerships

No. ME/2869/07

The OFT's decision on reference under section 22 given on 17 May 2007. Full text of the decision published 31 May 2007.

Inchcape plc (Inchcape) is an international automotive services group, primarily active in the import, distribution and retail of new and used motor vehicles and the provision of financial services. In the UK, Inchcape is also active in the provision of fleet solutions, services and maintenance. It operates 117 franchises for a range of motor vehicle marques in the UK, including Toyota/Lexus, BMW, Mercedes-Benz, Volkswagen (VW), Jaguar and Land Rover.

European Motor Holdings plc (EMH) operates 52 motor vehicle retail franchises in the UK, representing a wide range of motor vehicle marques including Audi, BMW, VW, Bentley, Jaguar, Land Rover and Volvo. Dealerships offer sales of new and used cars, light commercial vehicles, parts, servicing and repairs.

TRANSACTION

Inchcape acquired the entire issued share capital of EMH. The transaction completed on 29 January 2007.

JURISDICTION

The aggregate Community-wide turnover of each of the parties exceeds €250 million and the parties combined aggregate worldwide turnover exceeds €5,000 million. While EMH achieves its entire turnover in the UK, Inchcape achieves 66.55 per cent of its Community-wide turnover (excluding Bulgaria and Romania ) in one Member State (the UK). Therefore, the undertakings concerned do not each achieve more than two-thirds of their aggregate Community-wide turnover within one and the same Member State, as envisaged by Art. 1(2) of the EC Merger Regulation  (ECMR). The concentration therefore meets the requirements of a Community dimension pursuant to Art. 1 (2) ECMR.
 
On 21 December 2006, the parties notified this transaction requesting its referral to the UK pursuant to Art. 4(4) ECMR. On 26 January 2007 the Commission agreed to the Art. 4(4) request from which date the OFT assumed jurisdiction.

As a result of the transaction, the parties have ceased to be distinct. The UK turnover of EMH was approximately £755 million  for the financial year ending 30 February 2006. The turnover test pursuant to Section 23(1) (b) of the Enterprise Act 2002 ('the Act') is therefore satisfied. The OFT believes therefore that a relevant merger situation under Section 23(1) of the Act has been created.

BACKGROUND

By way of a decision (pdf 120 kb) of 26 March 2007 the OFT announced that, on the evidence available to it, the OFT believed that it may be the case that the merger may be expected to result in a substantial lessening of competition in the supply of servicing and repair for new and nearly new Volkswagen cars in one locality of the UK. For the reasons set out in the Decision, the OFT believed that there was a realistic prospect that the reduction in the number of car dealerships from two to one would lead to a reduction in choice for consumers and a potential reduction in price and non-price competition.

On this basis, the OFT decided that the merger would be referred to the Competition Commission unless Inchcape gave suitable undertakings pursuant to section 73 of the Enterprise Act to address the competition concerns arising from the merger.

Inchcape offered undertakings to divest either the Inchcape dealership in Oswestry or EMH dealership in Wrexham to a purchaser to be approved by the OFT.

On 20 April 2007, the OFT published the proposed undertakings inviting interested third parties to give their views on them to the OFT. The OFT has not receive any responses that suggested that the proposed undertakings were not appropriate to remedy, mitigate or prevent the competition concerns identified.

DECISION

The merger would have been referred to the Competition Commission if Inchcape had failed to give suitable undertakings pursuant to section 73 of the Act to address the competition concerns outlined above. The OFT has decided to accept the proposed undertakings in lieu of reference as they address those competition concerns.

This merger will therefore not be referred to the Competition Commission and the undertakings (pdf 124 kb), which have been signed by Inchcape, will come in effect from this date.


Back to top

Recently viewed pages

This feature requires Javascript and Cookies to be enabled on your browser

Email alerts

Register for email alerts or amend your existing account details here.