UK: CMA voices concerns over Wood Group-Amec

On August 2, the Competition and Markets Authority (CMA) announced that the proposed GBP£2.2 billion (US$2.9 billion) merger between Wood Group and Amec Foster Wheeler could lead to competition concerns in the supply of engineering and construction services and operation and maintenance services on the UK continental shelf.

“This is because the companies currently compete closely with each other, and are two of the main suppliers of these services; the merger will reduce the number of major players currently active in these markets from four to three; there are concerns that competition from other suppliers may not be sufficient to mitigate competition worries; and other suppliers seeking to enter the market or expand their UK presence may face significant barriers to doing so.”

Wood Group has already proposed to sell Amec’s North Sea business and the CMA said it had worked constructively with the parties to find an agreement. Wood Group now has until August 9 to formalise its final remedies proposal. If it does not formally submit a remedies proposal, or if the remedies offered do not sufficiently address the regulator’s competition concerns, the merger will be referred for an in-depth ‘phase 2’ investigation.

Wood Group chief executive Robin Watson said: “Both sets of shareholders overwhelmingly supported the proposed combination and we continue to believe that the proposed remedy will be sufficient to obtain clearance from the CMA. We remain fully committed to completing the transaction in quarter four this year.”

Full Content: Stock Market Wire

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