COMPETITION COMMISSION CLEARS HOLLAND AND BARRETT/JULIAN GRAVES MERGER

The Competition Commission (CC) has formally cleared the completed acquisition of Julian Graves Limited by Holland and Barrett (which is owned by NBTY Europe Limited).

In its final report published today the CC has concluded that the merger would not result in a substantial lessening of competition within the market for the supply of nuts, seeds and dried fruit in the UK, or any local market in the UK. This confirms the conclusions of the provisional findings report, which was published on 22 July 2009.

The final report is published on the CC website at www.competition-commission.org.uk.

Julian Graves is a large independent specialist food and ingredients retailer, with over 350 stores in the UK, whilst Holland and Barrett is the UK’s leading specialist retailer of health products, with over 500 stores across the country. Prior to the merger, both companies were competing in the sale of nuts, seeds and dried fruit.

OFT refers Holland & Barrett / Julian Graves merger to the Competition Commission

The OFT has referred the completed acquisition of Julian Graves Limited by NBTY Europe Inc (NBTY), which owns Holland & Barrett, to the Competition Commission.

Julian Graves is a large independent specialist natural food and ingredients retailer, with over 350 stores in the UK, whilst Holland & Barrett is the UK's leading health food products retailer with over 500 stores across the country. At a local level, the parties are both present in at least 200 locations across the country, in many cases on the same high street.

The OFT's investigation focused on the extent to which the companies are close competitors for the supply of nuts, seeds and dried fruit in the UK, and how much the parties are constrained by competition from other suppliers, such as supermarkets and independent retailers.

Documents provided by both businesses indicated that they viewed themselves as close competitors for these products, and regularly monitored each other's prices. In addition, consumer survey work undertaken by the parties revealed that a large number of customers saw the businesses as closest substitutes for these products.

The OFT did not receive sufficient evidence that supermarkets and other retailers currently provide an adequate constraint on the parties. The OFT was also unable to confidently rely on the possibility that supermarkets and other retailers would enter the market or expand their current product offerings on a sufficient scale or swiftly enough to replicate the loss of competition arising from the merger.

The parties also overlap in the supply of vitamins, minerals and supplements, but whereas Holland and Barrett is a significant player in the market, Julian Graves sells only limited quantities. As a result, the OFT was able to rule out competition concerns on this basis.

Today's referral follows an OFT own-initiative inquiry.

Amelia Fletcher, OFT Senior Director of Mergers, said:

'This merger involves a potentially substantial loss of competition between two large national players operating within the same retail sector.

'In the absence of sufficient evidence that competition from other retailers will prevent the merged firm from raising prices or lowering quality at the expense of consumers, we must refer this to the Competition Commission for fuller inquiry.'

The Competition Commission is expected to report by 3 September 2009.