A merger deal between two of the main fuel pump suppliers to the UK market may avoid a threatened full-scale inquiry by the Competition and Markets Authority (CMA).
In June Dover Corporation agreed to buy Wayne Fueling Systems for $780m, but the CMA said it has found that the merger may lead to competition concerns in the supply of fuel dispensers in the UK.
It said “other than Dover and Wayne, there is only one other significant supplier of fuel dispensers in the UK (Gilbarco), with other suppliers lacking sufficient scale to constrain the merged entity. The investigation also found significant barriers to manufacturers seeking to enter or expand their UK presence.”
Sheldon Mills, CMA senior director of mergers and decision maker in this case, said: “We received a number of complaints about the merger and the evidence showed that, for many customers, the merger would reduce the number of alternative suppliers of fuel dispensers from three to two. We believe the merger could lead to increased prices for these products, or reduced service quality, which could ultimately pass through to drivers filling up at the pump. We therefore think the merger warrants an in-depth investigation, unless the companies offer suitable proposals to address our concerns.”
Dover and Wayne have proposed two alternative undertakings to the CMA: either (i) Dover would release Tokheim SSD from its obligation to only distribute Dover’s fuel dispensers in the UK, and Dover would also take measures to support Tokheim SSD distributing a rival manufacturer’s fuel dispensers in the UK; or (ii) Wayne would sell its UK distribution business to a buyer, to be approved by the CMA.
The CMA said there were reasonable grounds for believing that one of these proposals, or a modified version of them, might be acceptable to remedy the competition concerns it had identified.
The CMA has until 19 December 2016 to consider whether to accept a remedy, although the CMA may decide to extend this deadline to 16 February 2017 if it decides that there are special reasons for doing so.
As part of its process, the CMA will undertake a public consultation.