GUS/Littlewoods Issues
27 10월 2003 - 4:00PM
UK Regulatory
RNS Number:3117R
Competition Commission
27 October 2003
45-03
27 October 2003
INQUIRY INTO THE ACQUISITION BY MARCH UK LTD OF THE HOME SHOPPING AND HOME
DELIVERY BUSINESSES OF GUS PLC
Statement of Issues
The Competition Commission has sent an issues letter, to March UK, as part of
its inquiry into the recent acquisition of the home shopping and home delivery
businesses of GUS.
Such letters are always sent before the Commission has reached any conclusions
and are designed to highlight matters that have been identified for further
consideration. This statement is being made public to give interested parties
the opportunity to bring to the Commission's attention, in the next two weeks,
any further points that they wish to raise. The Commission has reached no
conclusions about whether any matters operate or may be expected to operate
against the public interest and will not do so until after it has discussed
these issues with the parties concerned.
The issues that the Commission intends to consider are:
a) The appropriate definition of the economic markets affected by the
acquisition, in particular:
* whether there is a single market (or a distinct segment of a market) for
providers of agency mail order, or whether they are part of a wider market;
* if they are, whether that wider market includes:
* other forms of mail order; and/or
* other forms of home shopping; and /or
* other forms of retail sales; and/or
* access to credit; and,
* whether there is scope for substitution at the boundaries of any of
the markets identified.
* Whether there is a single market (or a distinct segment of a market)
for providers of home delivery services, or whether they are part of a wider
market;
* if they are, whether that wider market includes:
* other forms of delivery; and/or
* is confined to delivery of parcels
* within particular weight ranges; and/or
* to particular types of destination; and /or
* within a particular price range or level of service; and
* whether there is scope for substitution at the boundaries of any of
the markets identified.
* Whether the relevant geographic markets for mail order and home
delivery are the same or different; and
* whether, for one or both, it is the UK, or whether it is part of a
wider or a narrower market.
* Whether competitive pressures from outside the relevant markets (however
defined) provide effective constraints on the behaviour of the parties
operating within them; and
* whether any of the factors referred to above - and, if so, to what
extent - have changed in recent years.
b) Whether the acquisition is likely to affect competition in any of the
markets identified, and, in particular:
* whether Littlewoods and GUS home shopping competed - before the acquisition
by March - for business in agency and/or direct mail order and/or
home delivery services; and, if so
* whether the acquisition can be expected substantially to lessen that
competition;
* whether, as a consequence, it is likely to lead ultimately to a significant
* rise in prices,
* reduction in the range of products or services offered,
* reduction in innovation,
* reduction in credit facilities provided, or
* reduction in quality, or levels of service, for all, or at least some,
customers, in the relevant markets - compared with what would otherwise have
occurred;
* whether any features of the markets - such as links between home
shopping providers and distributors - restrict competition;
* whether, as a result of the market conditions created by the acquisition,
other UK providers of home shopping and/or home delivery would be
seriously weakened;
* whether any practices - such as price discrimination, bundling
credit arrangements with goods ordered, or predatory pricing - may be
expected to come into existence or be exacerbated as a result of the
acquisition;
* whether the vertically integrated nature of Littlewoods' and March's
business is likely to be enhanced by the acquisition, with consequent
implications for competition;
* whether other aspects of the acquisition could be expected to be to
the detriment of customers or competitors; and
* whether any potentially unwelcome consequences of the acquisition
might be constrained sufficiently to avoid detriment to the public interest:
* by customers' ability to find alternative supply of such services in
the UK; or
* particularly for home delivery services, by their having sufficient
buyer power;
* whether as a consequence of lessening competition, following the
acquisition, the competitive position of suppliers to agency and/or direct
mail retailers may be affected adversely; and
* whether access to such suppliers by competitors of the merged
parties may be affected adversely.
(c) Whether there are significant barriers to entry or expansion in the relevant
markets, such as:
* high capital and start-up costs, for example in the recruitment of agents;
* economies of scale, such as advantages in being able to offer a very
wide range of products or a nation-wide service, in contracting with
suppliers, or in establishing a delivery and collection network;
* access to customer lists;
* economies of scope from operating in related markets; or
* an expectation that existing firms will respond aggressively to new
entry or expansion; and
* whether the acquisition may be expected to raise or lower such barriers.
(d) Whether technological progress in the market in the next five years, such as
the rapid growth of electronic ordering, is likely to effect competition,
and if so, how; and whether there are identifiable trends in the development
of the relevant markets that might affect competition in the future.
(e) Whether there are likely to be benefits to the public interest from the
acquisition; if so:
* what are they likely to be;
* to whom will they accrue; and
* whether they can be achieved only as a result of the acquisition;
The Commission also intends to explore what would have happened in the areas of
home shopping and home delivery, had the acquisition not occurred - in
particular:
* the implications for the level of competition in agency and direct
mail order and the home delivery business in the absence of the acquisition,
taking into account:
* GUS's plans for the home shopping business had it not been disposed, and
* other possible buyers of the business.
Notes to Editors
1. The reference was made by the Secretary of State for Trade and Industry,
under sections 64(8) of the Fair Trading Act 1973, on 25 September 2003 (see
DTI news release P/2003/487).
2. 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 23 December,
2003. It will subsequently be published.
3. This inquiry is being undertaken by a group of five Commission members
and is led by Peter Freeman, one of the Commission's deputy chairmen. The
other members are Alan Gregory, Professor of Corporate Finance at the
University of Exeter, Bruce Lyons, Professor of Economics at the University
of East Anglia, Robert Turgoose, formally a corporate finance partner in
PricewaterhouseCoopers, and Alan Young, a Director of the consultancy firm
Webster Young Limited.
4. Further information can be obtained from the Commission's website at
www.competition-commission.org.uk
5. Enquiries should be directed to Francis Royle, Press Officer
(020 7271 0242).
This information is provided by RNS
The company news service from the London Stock Exchange
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