HRP-logoUK: The Competition and Markets Authority (CMA) is to begin its initial investigations into Beijer Ref’s acquisition of UK refrigeration wholesaler HRP tomorrow (April 12).

The CMA will consider whether Beijer Ref’s proposed acquisition of HRP, completed on February 1, might result in a substantial lessening of competition within the UK market.

Already holding a 46% stake in HRP, Beijer Ref acquired the remaining shares in the company following the death in September of HRP chairman and main shareholder Kingsley Curtis. The addition of HRP to its existing Dean & Wood and RW UK brands made Beijer Ref the leading refrigeration and air conditioning wholesaler in the UK.

Although intending to operate HRP as an independent brand, Beijer Ref planned to stem HRP’s considerable losses and turn it back into a profitable business through what it described as “efficient co-ordination with the Group’s existing UK refrigeration operations and by implementing a fully-comprehensive UK logistics network”.

These plans were put on hold following the CMA’s enforcement order served on February 25 under section 72(2) of the Enterprise Act 2002.

The CMA now has until June 8 to decide whether to drop the case or refer the merger for a more detailed phase 2 investigation and final determination.

In the meantime, Beijer Ref is prevented from proceeding with its rationalisation plans which included closing HRP’s administrative headquarters in Bury St Edmunds and moving its functions to Beijer Ref’s UK administrative hq in Leeds.

Derogations

Beijer Ref has, however, achieved some relaxation of the initial enforcement order which requires HRP’s business to be operated independently during the investigations. Informed that HRP and Beijer Ref have a number of common suppliers, the CMA has allowed Beijer Ref to use its existing commercial position to negotiate additional discounts with these suppliers to HRP’s benefit.

The CMA’s action was referred to at last week’s Beijer Ref Annual Meeting in Malmö. CEO Per Bertland told shareholders that the formal takeover would be delayed but was expected to take place in Q2. He again confirmed that Beijer Ref was of the opinion that the acquisition would not influence the competitive situation in the UK.

Related stories:

CMA to investigate HRP acquisition

Beijer to restructure HRP to stem losses

Beijer Ref buys wholesaler HRP