UK: Blocking Prosafe-Floatel merger ‘the only way to mitigate competition concerns’

Competition authorities in the UK have found that blocking a merger between offshore accommodation specialists Prosafe and Floatel may be the only way to mitigate concerns related to lessening of competition and fears that customers may face higher prices as a result of the merger. 

Prosafe and Floatel announced their plan to merge in June last year, looking to create the world’s largest offshore accommodation company. However, the plan has come across competition concerns with both the UK and Norwegian competition authorities amid fears that the new company would reduce competition in the accommodation rigs sector.

The Norwegian Competition Authority in October 2019 issued a statement of rejection regarding the proposed merger between the two companies. By then, the process with the Competition and Markets Authority in the UK was in Phase 2 with more specific information anticipated to be available in the course of the first quarter of 2020.

On Thursday, January 30 the CMA issued its provisional findings which conclude that blocking the merger may be the only way to mitigate their concerns.

The CMA said that, based on the evidence so far, it had provisionally found that the merger “may result in a substantial lessening of competition and customers may face higher prices, and/or lower quality when tendering for semi-submersible ASVs.”

The CMA is consulting on solutions to these provisional findings and views are invited by February 6, 2020.

Kirstin Baker, the Inquiry Chair, said: “Prosafe and Floatel are the two biggest suppliers of this type of specialist accommodation to oil and gas companies operating in the North Sea. Based on the evidence we have seen so far about a lack of real alternatives to the two firms, we are concerned that companies tendering for staff accommodation in this area would face higher prices, or lower quality offers due to insufficient competition as a result of the merger. Our initial view is that blocking the merger may be the only way of addressing these concerns.”

Prosafe said in a statement on Thursday it would study the conclusions and supporting arguments in detail ahead of the deadline for responding by February 20.

The Norwegian Competition Authority’s decision to block the merger is currently being appealed to the Norwegian Competition Tribunal.

Offshore Energy Today Staff

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