Office of Fair Trading
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OFT refers treasury management services merger to Competition Commission

The OFT yesterday referred the completed acquisition by Sector Treasury Services Ltd (Sector) of ICAP plc's treasury management consultancy services business (Butlers), to the Competition Commission for further investigation.

The parties are the number one and two suppliers of treasury management consultancy services on a retainer basis to local authorities and are considered, by many customers, to be each other's closest competitors. The merger has led to combined market shares in excess of 70 per cent.

Treasury management consultancy services to local authorities include the supply of information and advice on, for example, investment and debt management, legal and regulatory compliance, risk assessment, and debt and investment accounting.

The OFT believes that the remaining suppliers of these services are unlikely to be able to constrain the merged entity and that barriers to entry in this market are high. It is therefore concerned that the merger may lead to local authorities paying higher prices or experiencing a reduction in quality, range or service. This view is consistent with the significant number of third party concerns received by the OFT.

Sheldon Mills, OFT Director of Mergers said:

'Our investigation identified concerns about the potential impact of this transaction on local authorities, and we also received a significant number of submissions to this effect. We therefore believe this is an appropriate case to refer to the Competition Commission for a fuller investigation.'

The Competition Commission is expected to report by 14 September 2011.


  1. The Reference Test - the OFT has a duty to make a reference to the Competition Commission 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 per cent share of supply in the UK (or a substantial part thereof) is created or enhanced.
  3. The Competition Commission may extend the 24-week period within which it is required to publish its report by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.
  4. The text of these decisions will be placed in the Mergers section of this web site as soon as is reasonably practicable.

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