Regulator cancels Babcock/CHC helicopter deal over competition concerns

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The Competition and Markets Authority (CMA) has ordered CHC to “unwind” its acquisition of Babcock’s offshore helicopter services.

The regulator explained that to address its concerns and to restore competition to pre-merger levels, CHC must now sell the business it bought for £10m.

The move follows an extensive Phase 2 investigation into the deal, involving customers, competitors and other industry players.

CHC provides offshore transport in the oil and gas sector, including the transport of workers to and from drilling platforms in the UK North Sea. Prior to the merger, Babcock also provided these services.

The CMA concluded that the parties were only two of four providers of offshore oil and gas helicopter services in the UK – and therefore exercised a significant competitive constraint on each other.

Losing this constraint would significantly reduce rivalry between an already limited number of suppliers, the decision explains.

As a result, the CMA found that the merger would cause significant competition concerns in the UK market for offshore oil and gas helicopter services.

The CMA reviewed bidding data for previous contracts, which indicated that the parties frequently bid against each other, and reviewed business strategy documents that showed the parties viewed each other as significant competitors.

Kip Meek, Chairman of the CMA Investigative Group, said: “Offshore oil and gas are important industries for the UK, and helicopter companies play a vital role in safely transporting workers to and from oil rigs.

“As the industry faces commercial challenges, UK customers continue to spend hundreds of millions of pounds on offshore helicopter services every year – competition is key to avoid higher prices or lower quality , issues that ultimately drive up costs for UK consumers.

“The sale of Babcock’s UK offshore oil and gas helicopter services business will support competition in future tenders for these important services.”

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