CC PROVISIONALLY CLEARS STS/BUTLERS MERGER

News Release

38/11 15 July 2011

CC PROVISIONALLY CLEARS STS/BUTLERS MERGER

The Competition Commission (CC) has provisionally cleared the completed acquisition by Sector Treasury Services Limited (STS) of Butlers, a trading division of ICAP plc, which provides treasury management advisory (TMA) services. STS is a wholly-owned subsidiary of Capita Business Services Limited.

Prior to the merger, both companies supplied (among other things) TMA services to local authorities in the UK under retainer contracts. Treasury management is the process by which public and private sector bodies manage their cash flows and associated financial risks. It includes deciding when, for how long and with whom to invest surplus funds and from whom to borrow additional funds and on what terms.

In a summary of its provisional findings report published today, the CC has decided that the merger will not lead to a substantial lessening of competition in the market for the supply of TMA services to local authorities on a retainer basis. The full provisional findings report will be published next week.

Malcolm Nicholson, Chairman of the STS/Butlers Inquiry Group, said:

We have provisionally decided to clear the merger. We believe that the merger will not have a significant effect on competition. The evidence suggests that if Butlers had not been bought by STS, its owners would have closed it anyway and wound down the existing contracts it held with local authorities. As a result, the merger does not reduce the number of competing companies in this market.

We did have concerns over whether the immediate transfer of Butlers' con-tracts to STS through the merger-as opposed to the alternative of them being retendered over a longer period of time-would provide STS with a competitive advantage through its increased ability to retain the contracts when they were retendered.

However, we feel that, whilst acquiring Butlers' contracts through the merger might give STS the chance to exploit customer inertia by attempting to retain these contracts with less attractive bids than it might otherwise have made, any such advantage, and hence the effect on competition, would be small. As a result, we have provisionally decided to clear the merger.

The CC will now consider responses to the provisional findings before publishing its final report, which it must do by no later than 14 September 2011.

The CC would like to hear views on the provisional findings report from all interested parties, in writing, by 5 August 2011. To submit evidence, please email [email protected] or write to:

Inquiry Manager (STS/Butlers)

Competition Commission

Victoria House

Southampton Row

LONDON

WC1B 4AD

Notes for editors

1. The CC is an independent public body, which carries out investigations into mergers, markets and the regulated industries.

2. The Office of Fair Trading (OFT) referred the case to the CC on 31 March 2011. The CC had been asked to decide whether the acquisition may be expected to result in a substantial lessening of competition in the market for treasury management con-sult-ancy services.

3. The members of the STS/Butlers Inquiry Group are: Malcolm Nicholson (Chairman of Inquiry Group), Ian Jones, Anthony Stern and Tony Stoller.

4. The Enterprise Act 2002 empowers the OFT to refer to the CC completed or proposed mergers for investigation and report which create or enhance a 25 per cent share of supply in the UK (or a substantial part thereof) or where the UK turnover associated with the enterprise being acquired is over £70 million.

5. The CC has a 24-week period in which it is required to publish its report, which may be extended by no more than eight weeks if it considers that there are special reasons why the report cannot be published within that period.

6. Further information on this inquiry, including the terms of reference and other key documents, as well as on the CC and its procedures, including its policy on the provision of information and the disclosure of evidence, can be obtained from the CC website at: www.competition-commission.org.uk.

7. Enquiries should be directed to Rory Taylor or Siobhan Allen or by telephoning 020 7271 0242.