Car parts depots ‘must be sold’ for merger to proceed

A number of car parts depots will have to be sold in order for the merger of Andrew Page and Euro Car Parts to proceed, the competition watchdog has found.

The acquisition of automotive parts and garage equipment supplier Andrew Page by the US owner of Euro Car Parts could damage competition in 10 local areas, an investigation panel has said.

Andrew Page, which has its HQ in Leeds, was bought in a pre-pack deal by LKQ Corporation in October 2016, a move which safeguarded the future of the company’s 2,000-strong workforce.

LKQ, which is valued at $10bn on the Nasdaq, already owns Euro Car Parts and used the UK business to buy its rival.

Administrators from PwC completed the pre-pack sale of 102 of Andrew Page’s 109 branches, its national distribution centre and corporate office.

Both companies sell car parts and components to independent garages and workshops and to larger national or multi-regional customers, including repair centre chains, vehicle fleets and roadside assistance companies.

Now, a group of independent panel members at the Competition and Markets Authority (CMA) investigating the merger identified ten local areas in England where the two companies were close competitors and where the merger could result in reduced competition for local customers, leading to higher prices or a lower quality of service.

The panel did not consider that national or multi-regional customers would be adversely affected by the merger.

Professor Alasdair Smith, inquiry chair, said: “Andrew Page was in administration and would have closed down if a purchaser had not been found. The only two other purchasers would have bought a much smaller number of depots. We think that in most markets the merger will not further reduce competition compared to the alternative.

“However, in ten local areas we are concerned that a reduction in competition could lead to higher prices and a lower quality of service.

“In addition to the summary of provisional findings and the provisional findings report, a notice of possible remedies has been issued today, which outlines the measures the CMA could take if it still believes the merger would reduce competition when it makes its final decision. This identifies that competition could be maintained if Euro Car Parts sells depots in the 10 affected areas.”

Private equity firms Endless and Phoenix Equity Partners invested in Andrew Page in March 2014 when the business was facing a cash crisis. They provided cash to enable the turnaround of the business.

However, the effects of a mild winter last year and the pound’s weakness since the EU referendum vote created another cashflow crunch.