The NCA’s decision to block the Prosafe-Floatel merger is effective

The Norwegian Competition Authority (NCA) decided on 28 October 2019, after an in-depth investigation, to prohibit the proposed merger between Prosafe SE and Floatel International Ltd due to serious competition concerns.

Prosafe and Floatel appealed the NCA’s decision to the Competition Appeals Board, but abandoned the proposed merger on 13 February 2020 before a verdict on the appeal. This means that the NCA’s decision to block the proposed merger is effective.

Prosafe and Floatel are the two largest suppliers and close competitors on the Norwegian market for offshore accommodation. The NCA considered that the proposed merger more was likely to hinder effective competition and result in higher prices and/or lower quality to customers in this market.

The companies are the only suppliers of modern semi-submersible offshore accommodation vessels on the Norwegian Continental Shelf. For some projects (e.g., deep-water, harsh weather conditions), Prosafe and Floatel face limited or no competition.

– Despite declining demand for offshore accommodation due to drop in oil prices, the NCA consider that both Prosafe and Floatel will continue to compete for projects on the Norwegian Continental Shelf in the absence of the proposed merger. Competition between the two companies is important to avoid price increases and to ensure high quality on services in this market, according to chief economist Kurt Brekke.

The proposed merger between Prosafe and Floatel has also been investigated by the Competition and Markets Authority (CMA) in the UK. The CMA published on 30 January 2020 a provisional finding report that concluded, after an in-depth (phase 2) investigation, that the proposed merger raises serious competition concerns on the UK Continental Shelf. The NCA has worked with the CMA on this case as it carried out a separate review into the deal.

Kurt Brekke, sjeføkonom i Konkurransetilsynet.
Kurt Brekke, Konkurransetilsynet.

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