Dealer merger ruled OK

Monday, October 23, 2006

Office of Fair Trading gives merger green light
Concerns raised over choice for motorists
Pendragon paid 500 million for Reg Vardy

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The merger of two of the UK's biggest car dealerships won't deny motorists choice, the Office of Fair Trading has ruled.

The OFT had been concerned that motorists in West Yorkshire, central Scotland, Hartlepool and Northamptonshire could have had less choice for servicing because of the merger.

Since Pendragon has agreed to get rid of dealerships in these areas, the OFT has said it won't refer the deal to the Competition Commission for further inspection: 'The loss of Reg Vardy as a competing dealership in the four areas would have reduced choice for customers.

'However, we are content that the divestments offered by Pendragon will address our competition concerns in this transaction.'

Although motorists are free to have their cars serviced at independent garages as well as franchises like those run by Vardy and Pendragon, the OFT says most still go to franchises.

The purchase of Reg Vardy and its 98 dealerships by Pendragon, which has 230 showrooms, creates the largest group in the UK and cost half a billion pounds.

Industry expert Professor Garel Rhys predicts that such consolidation will, in the short term, lead to more competitive deals as showrooms establish themselves but could, in the long term, lead to less choice and smaller discounts.