The Norwegian Competition Authority prohibits accommodation vessel operator Prosafe from acquiring Floatel. The Authority is of the opinion that the merger would lead to increased prices for customers of offshore accommodation services.
The transaction involves the two largest and closest competitors on the Norwegian market for offshore accommodation services. The Competition Authority’s decision was sent to the parties today.
– The Competition Authority is obliged to prohibit acquisitions that harm competition. We fear that buyers of accommodation services on the Norwegian continental shelf would have few or no competing suppliers in future tenders if the merger was allowed to proceed, says Director General Lars Sørgard.
Prosafe and Floatel are the only suppliers of modern semi-submersible accommodation units on the Norwegian continental shelf. Accommodation units offered by other suppliers on the Norwegian continental shelf are not fully comparable to those offered by the parties. Other suppliers are therefore not able to compete for all contracts.
– Prosafe and Floatel are the two largest players on the market and there are few alternative suppliers. The Competition Authority is of the opinion that the parties only to a limited extent meet competition from other players, says Sørgard.
Future demand
Demand for offshore accommodation services has fallen since the fall in oil prices in 2014.
The parties claim that absent the merger the current level of supply of offshore accommodation services would not be maintained.
The Competition Authority has in the course of its investigation collected substantial information from the parties, customers and other market players.
– According to our market investigation, there will be a demand for offshore accommodation services in the coming years. The investigation has not revealed any convincing evidence suggesting that Prosafe and/or Floatel will withdraw from the Norwegian market if the merger is disallowed, says Deputy Director Marita Skjæveland.
– Our assessment is that the parties will continue to compete for future contracts on the Norwegian continental shelf in absence of the merger, she says.
Remedies
During the investigation, Prosafe proposed remedies with a view to remove the negative effects on competition that would result from the merger. However, these remedies were not sufficient to eliminate the competition concerns identified by the Authority.
The Authority’s decision can be appealed to the Competition Tribunal within three weeks.
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Marita Skjæveland, Deputy Director.