Helicopter services deal raises competition concerns

F.P. Report

LONDON: The CMA has provisionally found that CHC’s purchase of Babcock’s oil and gas offshore helicopter transportation services business raises competition concerns.

Following an in-depth Phase 2 investigation of this completed acquisition, the Competition and Markets Authority (CMA) has provisionally found that the merger would lead to a significant loss of competition in the market.

CHC and the acquired businesses both provide offshore transportation in the oil and gas sector, including taking workers to and from rigs in the North Sea.

The CMA’s investigation analysed a wide range of evidence, including data on bidding for previous contracts and hundreds of internal documents that show how the merging businesses assess competition in the sector. The CMA has also engaged with customers, competitors and other industry players to inform its provisional findings.

The evidence gathered by the CMA shows that the UK arm of the acquired businesses remains an effective competitor, and the loss of this competition would significantly reduce rivalry between an already limited number of suppliers. The merger would reduce the number of suppliers from 4 to 3 and the CMA does not believe that new players are likely to enter the market.

Kip Meek, Chair of the CMA inquiry group, said:

We’re concerned that this merger will reduce competition in a market which currently only has 4 competitors and that is vital to the smooth running of the North Sea oil and gas industry.

Our findings are provisional at this stage, and we welcome further responses from CHC and Babcock, as well as from other interested parties.

The CMA welcomes responses from interested parties to its provisional findings by 7 April 2022 and its notice of possible remedies, which sets out potential options for addressing its provisional concerns, by 31 March 2022. These will be considered ahead of the CMA issuing its final decision, which is due by 15 May 2022.