Littlewoods acquisition of GUS faces competition probe
Mail order merger raises competition issues
September 25 2003
Trade and Industry secretary Patricia Hewitt has referred the acquisition of the GUS home shopping business by Littlewoods owners the Barclay brothers to the Competition Commission.
The OFT has advised Hewitt that the acquisition by March UK, an associate company of Littlewoods, of the GUS home shopping operation and home delivery business, raised competition issues.
Hewitt said: “The OFT has advised me that there is a significant prospect of a substantial lessening of competition in mail order and the related activity of business to consumer parcel delivery.
“Within the mail order sector, Littlewoods’ post-merger share of supply is more than three times that of its next largest competitor, whilst the acquisition would also appear to result in Littlewoods accounting for more than half of budget business to consumer home delivery services.
“There are likely to be some competitive constraints on the merged company, for example from the high street, but it is not clear that they will be sufficient to render a price increase unprofitable.
“I have considered the OFT’s advice and accept its conclusions. I am therefore referring the merger to the Competition Commission so that it can be fully investigated.”
The Barclays moved to acquire GUS’s home shopping business in May. GUS operates brands including Kays, Great Universal, Choice, and Innovations, while its Littlewoods operates under its own brand plus other speciality mail order offers. The combined businesses would have a total mail order market share of around 30 per cent, above the 25 per cent which normally triggers competition concerns.
GUS sold up to concentrate on its more profitable retail operations, including Argos and the Homebase DIY chain acquired at the end of last year.
