Provisional adverse finding in EWS/Marcroft merger inquiry

Summary (6 pages, PDF) of the Competition Commission's provisional findings from its inquiry into EWS's take-over of Marcroft Engineering.

The Competition Commission found that because of EWS's small-scale involvement in the wagon maintenance market, the merger would only increase the market share of Marcroft's wagon maintenance business by one per cent by revenue, and concluded that the merger did not give rise to a substantial lessening of competition on that market.

However, the Competition Commission found that the merger would give EWS "the ability and incentive to raise prices and lower service quality to its rivals in the haulage market", and concluded that this constituted a substantial lessening of competition arising from the merger. Specifically, the Competition Commission was concerned that the merged entity would increase the prices (and decrease quality) of wagon maintenance services, at the sacrifice of market share in the "small" wagon maintenance market, in order to protect or gain market share in the "far larger" haulage market.

The Competition Commission's summary paper does not discuss the obligations the merged entity would face under competition law. Separately, EWS is subject to an ongoing ORR investigation, under Chapter II of the Competition Act 1998 and Article 82, concerning potential abuses in the market for coal haulage by rail.

Update, 26 May 2006: provisional findings report published.

For further information or advice please contact Franck Latrémolière.

Filed under Article 82, Competition Commission, Merger control, Public transport.

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