Euro Car Parts / Andrew Page Merger Inquiry: Final Report

(XUR&DU3DUWVDQG $QGUHZ3DJH $UHSRUWRQWKHFRPSOHWHGDFTXLVLWLRQE\(XUR &DU3DUWVRIWKHDVVHWVRIWKH$QGUHZ3DJH EXVLQHVV 2FWREHU © Crown copyright 2017 You may reuse this information (not including logos) free of charge in any format or medium, under the terms of the Open Government Licence. To view this licence, visit www.nationalarchives.gov.uk/doc/open-government- licence/ or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: [email protected]. Website: www.gov.uk/cma Members of the Competition and Markets Authority who conducted this inquiry Alasdair Smith (Chair of the Group) Lesley Ainsworth Rosalind Hedley-Miller Chief Executive of the Competition and Markets Authority Andrea Coscelli The Competition and Markets Authority has excluded from this published version of the report information which the Inquiry Group considers should be excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified information: considerations relevant to disclosure). The omissions are indicated by []. Some numbers have been replaced by a range. These are shown in square brackets. Non-sensitive wording is also indicated in square brackets. Contents Page Summary .................................................................................................................... 4 Findings .................................................................................................................... 15 1. The reference ..................................................................................................... 15 2. The Parties ......................................................................................................... 15 Euro Car Parts .................................................................................................... 15 Andrew Page ...................................................................................................... 17 3. Industry background ........................................................................................... 20 Supply of IAM car parts to the IMT ...................................................................... 20 Garage Equipment (GE) ..................................................................................... 26 Supply to retail customers and supply of private label car parts ......................... 26 4. The transaction and relevant merger situation .................................................... 26 Events leading up to the transaction ................................................................... 26 Structure of the transaction ................................................................................. 27 Rationale for the transaction ............................................................................... 28 Jurisdiction .......................................................................................................... 28 Enterprises ceasing to be distinct ....................................................................... 29 Concept of enterprise .................................................................................... 29 Ceasing to be distinct .................................................................................... 29 Turnover test ....................................................................................................... 30 Conclusion on jurisdiction ................................................................................... 30 5. Market Definition ................................................................................................. 30 Introduction ......................................................................................................... 30 Product markets .................................................................................................. 31 Evidence from the Parties ............................................................................. 31 Evidence from the Parties’ internal documents.............................................. 34 Evidence from ECP’s price matching data .................................................... 35 Third party supplier views .............................................................................. 35 Customer views ............................................................................................. 38 Our assessment of the evidence ................................................................... 39 Conclusion on the relevant product market ................................................... 45 Customer segmentation ...................................................................................... 45 Geographic market ............................................................................................. 47 Local IMT customers ..................................................................................... 47 Key Accounts ................................................................................................. 48 Conclusion on the geographic market ........................................................... 50 Conclusions on the relevant market .................................................................... 50 6. Counterfactual..................................................................................................... 50 Would AP have exited the market (through failure or otherwise) absent the Merger? ............................................................................................................. 52 Our view on exit ............................................................................................. 53 Would there have been an alternative purchaser(s) of AP or its assets? ............ 54 Availability of likely alternative purchasers .................................................... 56 Post-transaction issues ................................................................................. 59 Our conclusion on the most likely alternative purchaser and their bid footprint ................................................................................................... 59 Conclusion on the appropriate counterfactual ..................................................... 60 7. Assessment of the competitive effects of the Merger on local IMT customers .... 61 1 Methodology for assessing local areas where the counterfactual is closure of the AP depot...................................................................................... 62 Methodology for assessing local areas where the counterfactual is an alternative purchaser ......................................................................................... 64 Results of the filtering process ............................................................................ 68 Local assessments ............................................................................................. 68 Blackpool ....................................................................................................... 73 Brighton ......................................................................................................... 74 Gloucester ..................................................................................................... 76 Liphook .......................................................................................................... 78 Scunthorpe .................................................................................................... 81 Sunderland .................................................................................................... 82 Wakefield ....................................................................................................... 84 Worthing ........................................................................................................ 86 York ............................................................................................................... 88 Effects of the Merger ........................................................................................... 89 Countervailing factors ......................................................................................... 90 8. Assessment of the competitive effects of the Merger on Key Accounts .............. 91 Framework for our assessment........................................................................... 92 Would the closure of 49 depots have increased competition compared to the Merger? ....................................................................................................... 93 AP’s ability to compete for Key Accounts ............................................................ 93 Parties’ views ................................................................................................. 94 Evidence regarding AP’s ability to compete for Key Accounts prior to the Merger .................................................................................................... 95 Our assessment of AP’s ability to compete for Key Accounts ....................... 99 Other competitors for Key Accounts ................................................................... 99 Our assessment of current competitors’ ability to compete for Key Accounts ............................................................................................. 100 Would competition from PA and/or MPD have increased significantly in the counterfactual?....................................................................................... 100 Parts

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