UK OFT says Securicor-Royal Mail deal may impinge on competition

The Office of Fair Trading said Securicor PLC’s plan to acquire the cash handling and distribution business of the Royal Mail Group PLC, formerly Consignia PLC, could impinge on competition.

Following a review of the proposed transaction, John Vickers, OFT director general, said “it seems reasonable to conclude that there is a significant prospect that the transaction may be expected to result in a substantial lessening of competition.”

“In some respects, this transaction is akin to outsourcing the Post Office’s cash handling operations. But there are wider competition concerns,” he said in an advice published on OFT’s website.

As a result of the merger, “the rivalry between the Post Office and the other national players, which has occurred in bidding for some national contracts, will be lost,” he added.

This far outweighed the potential benefits of the acquisition, he said.

Thus, Vickers said he believes the plan requires further investigation and supported the Secretary of State’s recent decision to refer it to the Competition Commission.

The CC is expected to release its report in February.