This article outlines the key events and timeline of the Competition and Markets Authority (CMA) investigation into the merger between Euro Car Parts Limited and Andrew Page, two significant players in the UK automotive parts market.
Phase 1 Inquiry: Initial Concerns
The CMA launched its initial Phase 1 inquiry into the Euro Car Parts merger with Andrew Page on March 10, 2017. This followed an initial enforcement order issued on October 12, 2016, under section 72(2) of the Enterprise Act 2002, which pertained to Euro Car Parts Limited’s acquisition of assets from the Andrew Page business.
Prior to the formal inquiry launch, from March 10 to March 24, 2017, the CMA invited comments from interested parties regarding the merger. On May 10, 2017, the CMA announced its initial decision. Based on the information available at that stage, the CMA determined that the merger between Euro Car Parts and Andrew Page could potentially result in a substantial lessening of competition within the UK market. The full decision was published on June 15, 2017.
This initial assessment led the CMA to conclude that unless Euro Car Parts offered suitable undertakings to address the identified competition concerns, the merger would be referred for a more in-depth Phase 2 investigation. The core concern was that the consolidation of these two major automotive parts distributors could negatively impact market competition.
Phase 2 Investigation: In-Depth Review and Provisional Findings
On May 22, 2017, as no undertakings were offered at this stage, the CMA formally referred the Euro Car Parts merger with Andrew Page for a Phase 2 investigation. This phase involved a more detailed and comprehensive analysis of the potential impact of the merger. The statutory deadline for this phase was set for November 5, 2017.
To oversee this complex investigation, the CMA appointed an inquiry group. Initially chaired by Professor Alasdair Smith, the chairship later transitioned to Lesley Ainsworth on January 5, 2018, following Professor Smith’s term expiry. Ulrike Hotopp was also appointed to the inquiry group on January 3, 2018. The initial inquiry group, appointed on May 22, 2017, consisted of Professor Alasdair Smith, Lesley Ainsworth, and Rosalind Hedley-Miller.
An issues statement, outlining the scope of the Phase 2 inquiry and the CMA’s initial theories regarding potential adverse effects on competition, was published on June 15, 2017. Throughout the investigation, the CMA gathered evidence, including customer research surveys and responses from involved parties to various statements and decisions.
On September 14, 2017, the CMA published its provisional findings. These findings indicated that the acquisition of a significant portion of the Andrew Page business by Euro Car Parts could indeed harm competition in 10 local areas across the UK. This provisional conclusion reinforced the initial concerns raised in Phase 1 and highlighted specific geographic areas where competition might be substantially lessened.
Remedies and Undertakings
Following the provisional findings, and to address the CMA’s competition concerns, Euro Car Parts and Andrew Page offered undertakings. On December 8, 2017, the CMA issued a notice of proposal to accept these final undertakings and invited public comments until January 2, 2018.
After considering the proposed undertakings and public feedback, the CMA formally accepted final undertakings from Euro Car Parts and Andrew Page on January 12, 2018. To ensure compliance and proper implementation of these undertakings, the CMA appointed a remedy group on January 17, 2018, consisting of Lesley Ainsworth (Chair), Susan Hankey, Ulrike Hotopp, and Keith Richards. Susan Hankey later replaced Lesley Ainsworth as chair of the remedy group on April 1, 2018, following the expiry of Ms. Ainsworth’s term.
A key element of the undertakings involved the divestiture of Andrew Page depots in nine local areas where competition concerns were most pronounced. Euro Car Parts was directed to appoint a monitoring trustee on June 22, 2017, to oversee compliance with the initial enforcement order and the subsequent undertakings. Furthermore, on the same date, Euro Car Parts was instructed to use its best efforts to extend property licenses for Andrew Page locations.
Case Closure: Divestment and Resolution
The CMA’s investigation into the Euro Car Parts and Andrew Page merger concluded on September 4, 2018. This closure followed the successful completion by Euro Car Parts Limited (ECP) of the sale of Andrew Page depots in the nine identified local areas to Hilco Capital, a purchaser approved by the CMA. This divestment effectively addressed the CMA’s concerns about the substantial lessening of competition and allowed the merger investigation to be formally closed.
This case demonstrates the CMA’s role in scrutinizing mergers and acquisitions to ensure fair competition within the UK market, particularly in sectors like automotive parts where consolidation could impact local markets and consumer choice. The investigation process, from initial inquiry to the implementation of remedies and final case closure, highlights the CMA’s commitment to maintaining a competitive landscape.
