On 3 February 2020, TVS Europe Distribution Limited (TVS EDL), the holding company of Universal Components (UC), acquired the entire issued share capital of 3G Truck & Trailer Parts Ltd (3G).
The Competition and Markets Authority (CMA) has now decided that UCs’ purchase of 3G raises competition concerns in the wholesale supply of commercial vehicle and trailer parts.
Following an investigation by the competition watchdog, it has expressed concerns that the loss of competition brought about by the merger could result in the firms’ customers — motor factors (local distributors) supplying independent garages and repairers in the UK — losing out as a result of higher prices and a poorer service.
Evidence obtained by the CMA during its Phase 1 investigation of the merger showed that the companies compete closely with each other to supply customers with commercial vehicle and trailer parts.
In particular, the merging companies’ internal documents showed that they are close rivals, and that they monitor each other when setting prices.
Wholesale customers also expressed concerns about the impact of the deal and did not consider there to be sufficient alternatives to Universal Components and 3G.
The CMA assessed the strength of the constraint from alternative suppliers, including CV Logix, TTC, and other wide range wholesalers (including non-UK based wholesalers).
It found that CV Logix is the strongest third-party constraint on the Parties. However, the CMA did not consider that any alternative suppliers, either individually or collectively, would exert a sufficiently strong constraint on the merged entity.
The two companies must now address the CMA’s concerns within five working days. If they are unable to do so, the merger will be referred for an in-depth Phase 2 investigation.
Full details of the proposed merger can be found at www.gov.uk/cma-cases/universal-components-3g-truck-trailer-parts-merger-inquiry.
Last reviewed 24 June 2020