A proposed merger between two world’s largest offshore accommodation rig providers has now raised regulatory concerns both in the UK and in Norway.
The Norwegian Competition Authority said on Monday it was considering intervening against Prosafe’s acquisition of Floatel.
“The transaction involves the two closest competitors in the Norwegian market for offshore accommodation services. The Competition Authority has today notified the parties that it is considering blocking Prosafe’s acquisition of Floatel,” the regulator said.
“The Norwegian market for offshore accommodation services has a limited number of players with Prosafe and Floatel as the two largest suppliers. Prosafe and Floatel are the only suppliers that can offer modern semi-submersible accommodation units on the Norwegian continental shelf. The Competition Authority is of the opinion that the two suppliers are close competitors and that they only to a limited extent meet competition from other players, says Lars Sørgard, Director General of the Norwegian Competition Authority
According to the regulator, other suppliers on the Norwegian continental shelf offer accommodation units that are not fully comparable to the semi-submersible units of the parties, and are not able to compete for all contracts.
“We fear that customers after the merger will have few or no competing suppliers when tendering for offshore accommodation services.”
“We fear that customers after the merger will have few or no competing suppliers when tendering for offshore accommodation services. Reduced competition would lead to increased costs for customers,” says deputy director Marita Skjæveland.
“Prosafe has proposed remedies with a view to removing the competition concerns identified by the Competition Authority. However, the Authority’s preliminary assessment is that these will not sufficiently address the Authority’s concerns. The Competition Authority emphasizes that the objections against the acquisition are preliminary and that a final decision has not yet been adopted,” the regulator added.
Responding to NCA’s comments Prosafe and Floatel on Monday said:” Prosafe and Floatel have already presented remedial measures to the NCA, to ensure customers on the Norwegian continental shelf have access to sufficient vessel capacity at short notice, on competitive terms. While some of Norway’s most professional customers are positive, the measures have so far not been accepted by the NCA. Prosafe and Floatel will submit responses to NCA’s considerations. A final decision from the NCA is expected towards the end of October.”
The proposed merger, if realized, would create the world’s largest offshore accommodation company, with Prosafe currently owning and operating a total of nine offshore accommodation units, and has options for delivery of two newbuilds, while Floatel’s fleet counts five units.
UK competition authority concerned too
Earlier in September, the UK Competition and Markets Authority (CMA) said it was concerned that the deal could reduce competition in the supply of ASVs for oil and gas projects on the UK continental shelf.”In a statement on Thursday, the UK Competition and Markets Authority (CMA) said:”After completing its initial Phase 1 investigation, the CMA is concerned that the deal could reduce competition in the supply of ASVs for oil and gas projects on the UK continental shelf.”
“The CMA’s investigation has found that Prosafe and Floatel are the 2 largest suppliers in the market, owning the vast majority of semi-submersible offshore accommodation in North West Europe. They compete closely with each other and have consistently won the most contracts over time. Aside from the merging businesses, there are limited alternatives available to customers at present,” the CMA said.
“The CMA is therefore concerned that because of the deal, Prosafe and Floatel’s customers would face higher prices or lower quality offers when tendering for ASVs due to insufficient competition,” the competition authority said.
Offshore Energy Today Staff
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