CHC Helicopter Group’s acquisition of the offshore oil and gas aviation business of Babcock International will be subject to an in-depth investigation by the UK’s Competition and Markets Authority (CMA) unless CHC can quickly address the regulatory body’s concerns.
At the beginning of September this year, CHC announced that it had completed its purchase of the Babcock division, but also noted that the business would operate independently whilst regulatory approvals were sought.
A CMA statement on 18 November noted that CHC and the Babcock business both provide offshore transportation services taking workers to and from rigs in the North Sea. It pointed out that they are two of four suppliers in this field and compete against each other regularly to win contracts. The CMA expressed concern that the loss of one of these four suppliers could lead to higher prices and lower quality services for customers.
Colin Raftery, senior director for the CMA, 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 gets only five working days from the date of the CMA’s announcement in which to submit suitable proposals that address the competition concerns. If it is unable to satisfy the CMA, the deal will be referred for an in-depth Phase 2 investigation.