OFT Considers Remedies in Electrical Wholesaling Merger

The OFT is considering undertakings offered by Rexel UK Limited (Rexel) to sell branches in six local areas in order to remedy local competition concerns arising from its completed acquisition of the Wilts Wholesale Electrical Company Limited business (Wilts).

Rexel is one of the largest electrical wholesalers in the UK. It is part of a worldwide distributor of electrical products and has around 360 branches across the UK under the banners Newey & Eyre, WF Senate and Denmans. Wilts has around 60 branches in the southern half of the UK.

The OFT concluded that the merger did not give rise to competition concerns at a national level because Wilts did not have a national presence or customer base. The OFT's investigation also did not find competition concerns at a regional level, because in the main region of overlap, the South West of England, sufficient competitors would remain.

However, the OFT did find evidence that the merger could reduce competition in six local areas in England and enable the parties to raise prices or reduce quality, range or service to customers.

To resolve these competition concerns Rexel has offered undertakings to sell all of the seven Wilts branches in the six affected local areas. The OFT considers that it is appropriate in this case to require an upfront buyer to be identified before finally accepting undertakings from Rexel to sell these branches.

Ali Nikpay, OFT Senior Director and Decision Maker in this case, said:

'The OFT is concerned that in six local areas customers could face higher prices and a reduction in choice following this deal. Rexel has, however, offered to sell branches in these areas. If an appropriate buyer or buyers are found we believe that these disposals would solve the competition problems which our investigation identified.'

While the undertakings in lieu of a reference are being considered, the OFT's duty to refer the merger to the Competition Commission is suspended.

Tags: Wholesaler/Distributor News, electrical digest, e-lec.org