A merger last year between two duct suppliers could increase the cost of commercial projects, the UK competition regulator has concluded.
The Competition and Markets Authority (CMA) launched an investigation in November into Lindab’s acquisition of Birmingham-based HAS-Vent, over fears the move might limit competition in duct supply.
The combination of the two biggest circular duct suppliers could increase prices for contractors and bump up the cost of building offices, schools and hospitals, the body concluded.
Sorcha O’Carroll, senior director for mergers at the CMA, said: “We’re concerned this deal between Lindab and HAS-Vent may reduce competition in England and Wales, leading to higher prices for construction projects.
“It is now up to Lindab and HAS-Vent to offer solutions to our concerns, otherwise this case will proceed to a more in-depth phase two investigation.”
The CMA found the two companies, which both manufacture and distribute ventilation products, would supply half of the circular ducts and fittings in England and Wales if the merger goes ahead.
Nearly all competitors the regulator spoke to were concerned about the effect of the merger on competition.
Lindab and HAS-Vent have until next Friday (3 May) to offer concessions to the CMA, or the regulator will pursue a further in-depth investigation.
A spokesperson for Lindab said: “The CMA investigation for circular ducts and fittings in England/Wales is now moving into phase two.
We have cooperated fully with CMA during phase 1 and are, of course, disappointed that a phase two is needed.
At the same time, we are welcoming a continued investigation by CMA, as we believe that the investigation will show that the market is fully competitive and the acquisition it will not harm competition.”
Construction News contacted HAS-Vent for further comment.
Sweden-based Lindab operates in the UK mostly through subsidiaries Lindab UK and Ductmann, with 21 branches in England and Wales. HAS-Vent, headquartered in Birmingham, has 10 branches.
The CMA also investigated the merger’s impact on the supply of flat oval ducts and fittings. It concluded that, while HAS-Vent is the largest distributor in the market, Lindab’s distribution capability is too small to harm competition.
