Air conditioning merger could cut choice for Aberdeen customers, warns CMA

Air conditioning merger could cut choice for Aberdeen customers, warns CMA

A proposed merger between two major air conditioning and refrigeration wholesalers could mean less competition and choice for customers in Aberdeen, the UK competition watchdog has warned.

Following a Phase 1 investigation, the Competition and Markets Authority (CMA) has provisionally found that the deal between Wolseley UK Limited (Wolseley) and Kooltech Limited (Kooltech) raises competition concerns in Aberdeen – potentially leaving customers to face higher prices or lower quality services.

Wolseley and Kooltech are both UK-wide suppliers of air conditioning (AC) and refrigeration products. Both businesses have multiple branches, including one each in Aberdeen, which are particularly important for customers with urgent demands or who prefer collecting in-store.

According to the CMA, the merged business will continue to face sufficient competition from rivals in most locations. But the two companies are currently the only wholesalers of AC and refrigeration products in Aberdeen, so would face very limited competition after the merger. This could lead to higher prices and lower quality services, such as reduced availability of stock, for customers in that area.

Colin Raftery, CMA senior director of mergers, said: “Whilst the vast majority of businesses and other customers across the UK won’t lose out, we’re concerned that this deal could lead to higher prices and worse services for customers in the Aberdeen area.

“Our investigation found that it’s important for customers to be able to access air conditioning or refrigeration products locally when they need to – so a merger between the only two suppliers in this area would be a significant loss of competition for customers.”

Wolseley and Kooltech now have five working days to offer proposals to the CMA to address the competition concerns identified. The CMA would then have a further five working days to consider whether to accept these proposals in principle instead of referring the case for a Phase 2 investigation.

Kooltech said it was committed to the merger.

Jonathan Brown, commercial director from Kooltech, said: “We have today been informed by the CMA around a concern in Aberdeen as a result of the acquisition by Wolseley.

“Both Kooltech and Wolseley remain committed to completing the deal, and we will be working closely with them, and the CMA to alleviate any concerns, in order to complete the acquisition as soon as possible.

“In the meantime, both businesses will continue to operate as usual.”

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