Competition Commission: Merger would harm Liverpool competition
The United Kingdom’s Competition Commission said that after provisional studies SvitzerWijsmuller A/S's proposed takeover of Australian-listed towage company Adsteam Marine would reduce competition for harbor towage services in the Port of Liverpool but no other ports in the country.
Global towage and salvage company SvitzerWijsmuller, part of Denmark's A.P. Moller-Maersk, has offered A$2.581 ($1.96) per share to Adsteam’s shareholders, including the whole of the interim dividend declared by Adsteam. The total value of the takeover is about A$700 million ($550 million).
Svitzer Marine Ltd., the U.K. subsidiary of SvitzerWijsmuller, operates 41 tugs and provides services in seven port areas and at six terminals in the country, while the British arm of Adsteam, Adsteam UK Ltd., provides harbor and terminal towage services in six major deepwater port areas and their adjacent waterways.
“Whilst nearly all ports and terminals in the U.K. have only one towage operator, in Liverpool Adsteam and Svitzer currently provide competing services and we believe that the loss of competition will lead to higher prices for harbor towage services in Liverpool,” said Christopher Smallwood, the Competition Commission’s Inquiry group chairman.
'We found that at other ports and terminals with a sole towage operator, the threat of possible entry by other providers is the most likely constraint on prices, but is not as great a constraint as competition from another operator.
'However, we do not think that the merger will lead to higher prices or reduced competition across the U.K. as a whole. We do not believe that the merged company would be able to make it significantly more difficult for potential new competitors to enter the market,' Smallwood said.
SvitzerWijsmuller's Chief Executive Officer Jesper T. Lok said: “We welcome the Competition Commission's provisional findings that the proposed transaction will not result in a substantial lessening of competition outside Liverpool.
'We will address the provisional findings both in respect of Liverpool and the possible remedies in relation to that port with the Competition Commission during the ongoing review process,' Lok said.
The Competition Commission is expected to release its final report in mid-February.