The UK’s Competition and Markets Authority has given the buyer of Babcock’s international offshore oil and gas aviation business five days to address competition concerns.
Helicopter services provider CHC Group bought the Babcock business for £10m in September. But the competition watchdog said on Thursday that the deal could result in “a substantial lessening of competition”.
As a result, the merger will be referred for a phase 2 investigation “unless the parties offer acceptable undertakings to address these competition concerns”. The deadline for CHC to submit proposals is 25 November.
The CMA pointed out that both businesses provide offshore transport in the oil and gas sector, taking workers to and from rigs in the North Sea. It noted that CHC and the Babcock unit are two of only four suppliers in this field and compete against each other regularly to win contracts.
“The CMA is concerned that the loss of one of these four suppliers could lead to higher prices and lower quality services for customers,” it said.
CMA senior director Colin Raftery said: “Our investigation showed that CHC’s purchase of the Babcock Business would take out an important competitor.
“While oil and gas exploration in the North Sea is expected to decline over time , these are safety-critical services on which customers continue to spend hundreds of millions of pounds a year. It is therefore important that this deal is subject to more detailed scrutiny if our concerns aren’t addressed.”
