Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Concerns raised over AFW and Wood Group merger

Dunlin A

The Competition and Markets Authority (CMA) has said that Wood Group’s £2.2bn purchase of Amec Foster Wheeler could lead to competition concerns in the supply of engineering services to the UK’s upstream offshore oil and gas sector.

The CMA has finished its initial investigation into the merger and has said that because the two firms currently complete closely with each other, if they merge, it will cut the number of major players active in the market from four to three.

It said: “There are concerns that competition from other suppliers may not be sufficient to mitigate competition worries; and other suppliers seeking to enter the market or expand their UK presence may face significant barriers to doing so.”

Wood Group has already said it will work to resolve any competition concerns and it is working with the CMA to find possible solutions if competition issues are confirmed. A deadline for a remedies proposal has been set for 9 August.

Deputy chief economic adviser and the decision maker in this case, Kate Collyer, said: “We have consulted widely on the implications of this merger and it is clear that Wood Group and Amec Foster Wheeler have a particularly strong market position in the supply of key services to the Upstream Offshore oil and gas sector in the UK. The merger would, therefore, remove the rivalry between two of the four main suppliers of these services.

“Based on our initial investigation, this could significantly reduce customers’ ability to obtain competitive bids, which could lead to increased prices and affect the competitiveness of the oil and gas industry in the UK.

“The CMA’s team will continue to work constructively with the Wood Group and Amec Foster Wheeler in the assessment of the remedies that they intend to formally offer to address these concerns. This merger will, however, warrant an in-depth investigation, unless the companies offer suitable proposals to address our concerns.”

Both Wood Group and Amec Foster Wheeler have said that they consider the remedy they are proposing will be sufficient to address the CMA’s competition concerns and to obtain clearance for the merger, which it expects to finish by the end of the year. The remedy is a sell off of some of Amec Foster Wheeler’s assets.

Wood Group chief executive Robin Watson said: “Both sets of shareholders overwhelmingly supported the proposed combination and we continue to believe that the proposed remedy will be sufficient to obtain clearance from the CMA. We remain fully committed to completing the transaction in quarter four this year.”

Amec Foster Wheeler chief executive Jon Lewis added: “Since the announcement of the remedy offer in May, Amec Foster Wheeler has made good progress marketing its UK upstream oil and gas business to a range of potential buyers and is continuing the divestment process. We remain committed to closing the transaction in quarter four this year.”


Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Please note comments made online may also be published in the print edition of New Civil Engineer. Links may be included in your comments but HTML is not permitted.