The decision to move to what is a more detailed investigation or phase 2 follows an initial, phase 1, investigation which identified competition concerns that, as yet, Electro Rent has not been able to address.
The two companies rent, lease and sell equipment used to test and measure the performance of a wide range of electronic devices covering telecommunications, aerospace and defence, utilities and information technology, among others.
The CMA’s phase 1 investigation found that as each company is their closest competitor in the rental of test & measurement equipment, particularly because of the value, scope and depth of their stock, and while the combined entity could face some constraint from the sale of testing and measurement equipment, a large number of customers had expressed concerns about the merger and said that they would be unable to identify credible rental alternatives should the merger proceed.
As a consequence the CMA expressed concerns that the merger could substantially lessen competition in respect of rental options available to customers.
In response to the CMA Electro Rent initially offered to sell its UK business to a competitor, but has now informed the CMA that the proposed purchaser has withdrawn from the deal.
As a result the CMA has referred the acquisition for a phase 2 investigation which means that a new set of decision makers – an inquiry group chosen from the CMA’s independent panel members - will now assess whether the deal could reduce competition by conducting further research and analysis as well as seeking views and evidence from all those potentially affected by the merger.
The statutory timetable for the in-depth phase 2 investigation is 24 weeks.
