Commission authorises acquisition of UK Royal Mail's IT division by Computer Sciences Corporation

The European Commission has approved the acquisition of sole control over RM Business Systems Limited the IT division of UK postal operator Royal Mail Group plc – by the US-based IT services provider Computer Sciences Corporation (CSC). The Commission has concluded that no competition concerns arise from the transaction

Royal Mail has decided to outsource its IT services to CSS. Previously, its former RM Business Systems Division (RM-BSD) provided these services to Royal Mail. The approved transaction is part of the agreement entered into by CSC and Royal Mail Group, according to which the latter will outsource to CSC it’s IT services.

The present operation concerns the outsourcing of IT management services, which can be defined as the day-to-day operation of IT assets and processes. IT management services comprise operational services, applications IT management services and helpdesk IT management.

Royal Mail and CSC are not engaged in overlapping activities. Neither are they active in upstream or downstream markets of each other. CSC is active on the market/s for IT services, whilst Royal Mail provides postal services in the United Kingdom. RM-BSD provides in-house IT services. Furthermore, the envisaged transfer of assets and resources will not result in any significant increase of CSC’s market position with respect to IT services. Both the overall IT services market and the IT management services market are very fragmented markets, CSC having a very limited position in each of them.

The Commission has stated in previous cases(1) that the relevant product market for such services may be either the overall market for IT services or the IT management segment itself. It has also indicated that the markets for IT services continue to be national in scope, although increasing internationalisation has been identified. In any event, market definitions have frequently been left open since the operations at stake did not give raise to significant competition concerns. This is also true for the present case.

Background

CSC is a multinational company providing information technology (IT) services to commercial and government customers. Namely, it is active in IT outsourcing/management services, IT management consulting and systems integration.

RM-BSD is a former division within Royal Mail Group, a public company wholly owned by the UK government that provides postal services in the United Kingdom. RM-BSD has been incorporated as a new company, RM Business Systems Limited, for the purposes of the present operation. It provides in-house IT services to Royal Mail Group.

(1) Cases COMP/M. 2946-IBM/PWC Consulting; COMP/M. 1901-Cap-Gemini/Ernst and Young; COMP/M. 1561- Getronics/Wang; COMP/M. 2609-HP/Compaq; IV/M.668-Philips/Origin; IV/M.798-General Electric/Compunet; M. 2195-Cap Gemini/Vodafone/JV; M. 2478 -IBM Italia/Business Solutions/JV.