Simon Pritchard, the OFT's Senior Director of Mergers, said:
'Transocean's fleet of rigs is by far the largest in the UKCS and the merger eliminates GSF as a rival bidder for contracts in future. While the relevant GSF fleet is not especially large, the loss of this bidder raises concerns where the foreseeable market looks to remain very tight - with insufficient spare capacity or new build likely to challenge the merged firm - and where the weight of customer concern has been very substantial. On balance, we believe there is a realistic prospect of substantially less competition with the potential for higher day-rates and lower service standards post-merger. We therefore welcome the parties' offer to divest GSF's rig fleet located in the UKCS. This proposed settlement with the OFT protects customers by restoring relevant competition to its pre-merger level; at the same time, it will not delay the rest of this global transaction between two U.S.-based players.'
1. The Reference Test - the OFT has a duty to make a reference to the CC if the OFT believes that it is or may be the case that arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services.
2. Under the Enterprise Act 2002 a relevant merger situation is created if two or more enterprises have ceased to be distinct enterprises; and the value of the turnover in the United Kingdom of the enterprise being taken over exceeds £70 million; or as a result of the transaction, in relation to the supply of goods or services of any description, a 25 percent share of supply in the UK (or a substantial part thereof) is created or enhanced.
3. Under section 73 of the Enterprise Act 2002 the OFT may, instead of making a reference, and for the purpose of remedying, mitigating or preventing the substantial lessening of competition concerned, or any adverse effect which has or may have resulted from it or may be expected to result from it, accept from such of the parties concerned as it considers appropriate undertakings to take such action as it considers appropriate. In doing so, the OFT will have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to the substantial lessening of competition and any adverse effects resulting from it.
4. Before accepting any such undertakings under Schedule 10 of the Enterprise Act 2002, the OFT shall give notice of the proposed undertakings and will consider any representations made in accordance with that notice.
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