CHC and Babcock’s oil and gas offshore helicopter business (the Babcock Business) both provide offshore transportation in the oil and gas sector, taking workers to and from rigs in the North Sea.
The Competition and Markets Authority (CMA) identified competition concerns relating to the deal that, unless addressed, will mean that the merger will be subject to an in-depth Phase 2 investigation.
CHC and the Babcock Business are two of 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.
Colin Raftery, CMA Senior Director, 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.
CHC must now submit proposals to address the CMA’s concerns within 5 working days. If suitable proposals are not submitted, the deal will be referred for an in-depth Phase 2 investigation.