CMA Reviews Proposals to Ease Oil Deal Concerns
CMA considers that undertakings offered by oilfield services provider Schlumberger (SLB) could resolve competition concerns in the UK relating to its acquisition of ChampionX, a global provider of chemical solutions, oilfield services and equipment.
The Competition and Markets Authority (CMA) is considering SLB’s offer of undertakings to resolve the competition concerns it identified during its Phase 1 investigation of SLB’s acquisition of ChampionX.
SLB and ChampionX are leading global suppliers of oilfield services, equipment and related technologies. Both companies have significant operations (including UK assets) supplying important inputs to oil and gas companies and other oilfield services firms in the UK North Sea. They hold substantial positions in the UK markets in which the CMA has identified competition concerns.
The undertakings offered include:
the sale of SLB’s UK production chemical technologies (PCTs) business to a CMA-approved buyer
the sale of ChampionX’s global US Synthetic business, which supplies market-leading polycrystalline diamond (PCD) bearings used in certain directional drilling services by SLB’s rivals in the UK, to a CMA-approved buyer
a licence covering relevant intellectual property and know-how to a CMA-approved alternative developer of quartz sensors and transducers supporting the growth of a strong alternative supplier in this segment, together with agreements to provide SLB’s rival suppliers of permanent downhole gauges (PDGs) in the UK access to ChampionX’s market-leading quartz sensors and transducers for an interim period
Having provisionally found that these undertakings could address its concerns, the CMA now has 40 working days to consider them in more detail, including seeking third-party feedback. If satisfied, the CMA will proceed to clear the deal subject to its final acceptance of the undertakings.
The CMA is concerned that the deal – if allowed to proceed without remedies – could cement the companies’ substantial positions in highly concentrated markets, potentially leading to higher costs, fewer alternatives and reduced innovation, impacting the competitiveness of the UK’s oil and gas industry.
Sorcha O’Carroll, Senior Director for Mergers at the CMA, said:
Effective competition in the oil and gas industry drives innovation, pushing companies to reduce costs and develop more efficient ways to produce energy. It also helps ensure that prices remain competitive, benefiting consumers whilst allowing companies to meet global energy demands.
We are continuing to engage constructively with the companies on the proposals they have put forward to resolve our competition concerns. We’ll also consider any feedback we receive on these undertakings before reaching a final decision
https://www.gov.uk/government/news/cma-receives-proposals-which-may-address-competition-concerns-in-oil-services-deal