Competition watchdog says helicopter merger raises concerns

The merger of Babcock's helicopter unit with CHC was first announced in March

A watchdog has found that the merger of two oil and gas offshore helicopter businesses raises competition concerns in the UK.

The announcement by the Competition and Markets Authority (CMA) follows a formal investigation into CHC Group's purchase of Babcock's Aberdeen-based aviation division earlier this year.

Both provide offshore transportation for workers in the North Sea.

The CMA found the merger would "take out an important competitor".

• Watchdog launches formal inquiry into helicopter merger

• Helicopter firm to buy North Sea aviation operator

It said: "CHC and the Babcock Business are two of four suppliers in this field and compete against each other regularly to win contracts.

"The CMA is concerned that the loss of one of these four suppliers could lead to higher prices and lower quality services for customers."

The watchdog said that unless competition concerns relating to the deal were not addressed, the merger would be subject to a more in-depth investigation. CHC has been given five working days to submit proposals to address the CMA's concerns.

'Important competitor'

CMA senior director Colin Raftery said: "Our investigation showed that CHC's purchase of the Babcock Business would take out an important competitor.

"While oil and gas exploration in the North Sea is expected to decline over time, these are safety-critical services on which customers continue to spend hundreds of millions of pounds a year.

"It is therefore important that this deal is subject to more detailed scrutiny if our concerns aren't addressed."

The companies reported on 1 September that they had completed the £10m deal, which was first announced in March.

But the CMA later started looking formally looking into the merger.