The Competition Commission (CC) is requiring VPS Holdings Limited to sell SitexOrbis’s business in Britain after ruling that the merger could harm competition and lead to higher prices for many customers.
The Competition Commission (CC) has announced that it has not approved the completed acquisition of SitexOrbis Holdings Ltd by VPS Holdings Limited. This follows referral to the CC by the Office of Fair Trading (OFT) on March 5, and an announcement from the CC in June that it had provisionally decided that the completed acquisition by VPS Holdings Limited of SitexOrbis Holdings Limited could harm competition in the UK.
Briefly, the CC carries out investigations into mergers, markets and the regulated industries. It said that the parties are the country’s two main suppliers of vacant property security services to local authorities and businesses (including residential and commercial landlords, retailers, facilities management companies and insurance firms). Vacant property security services involve the securing of vacant social housing and commercial properties through the provision of steel screens, doors and wireless alarms.
The CC found that the merger gave the parties a very high share of the market for social housing, with limited competition from rivals or alternatives for customers from providers in adjacent markets. For commercial sector customers, competition is not uniform across the country. So although commercial customers in some areas will still have alternative suppliers, customers in other areas and those who require nationwide coverage would lose out from the merger. The CC considered whether new entry or expansion would offset this lessening of competition but concluded that this was unlikely.
The CC published a notice of possible remedies at the time of its provisional decision and has since been carrying out detailed consideration of the options. VPS will now need to find a buyer for SitexOrbis’s business in Britain, and obtain the CC’s approval for the proposed purchaser.
CC Deputy Chairman and Chairman of the VPS/SitexOrbis Inquiry Group, Professor Alasdair Smith, said: ‘We think that an effective way to protect competition for customers is for SitexOrbis’s business in Great Britain to be sold so it can continue as a close competitor to VPS. Without this, many customers would be faced with too little in the way of alternatives —either from existing competitors or potential new entrants — to prevent the merged company from raising prices. We did consider whether alternative remedies options would address our concerns but decided that divestment of SitexOrbis’s business in Great Britain as a whole is necessary to create an effective competitor.’
David Walker, CEO of SitexOrbis, said after the ruling: “Since the announcement of the Competition Commission’s preliminary findings we have anticipated that the acquisition would not be allowed to stand. Friday’s announcement confirms what we expected and we are well prepared to deal with all matters arising and we continue to view the future with excitement. Our confidence is demonstrated by our recent addition of a number of sales professionals to work across all parts of our business.
“SitexOrbis and VPS have been operating separately during the investigation by the OFT and Competition Commission and that will continue for the next few months while a new buyer is found. SitexOrbis has been renowned for its high levels of customer service and we have worked hard to ensure that the acquisition has not affected our service delivery over the period since the acquisition. The announcement does not change our continued commitment to deliver excellent service to our customers.
“The possibility of SitexOrbis’ Northern Ireland business transferring to VPS will present a number of practical challenges. However, we are confident that any difficulties will be quickly resolved and that SitexOrbis will continue to have an effective operational capacity across the whole of the UK.”
About SitexOrbis
SitexOrbis provides vacant property services for commercial property and social housing: such as screens and cleaning and clearing of debris and monitoring it with battery-powered video alarms. Services include infection control, long-term mould eradication and access control. Visit www.sitexorbis.com
