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OFT clears HMV to take Zavvi stores

The OFT has cleared the proposed acquisition of 15 former Zavvi stores by HMV.

OFT clears HMV to take Zavvi stores

The OFT has cleared the proposed acquisition of 15 former Zavvi stores by HMV.

The OFT investigated the merger on its own initiative, as prior to Zavvi going into administration at the end of last year the companies had overlapping stores in a large number of

localities. Following its investigation, the OFT has decided that a reference to the Competition Commission is not be necessary as the 'failing firm defence' is met.

A merger based on a 'failing firm' claim can be allowed by the OFT if evidence clearly shows that, without it, a business would have exited the market completely, and that no realistic alternative to the merger was available. The rationale for accepting such claims is that any harm to competition would result even without the merger, and so should not be attributed to it.

OFT chief executive John Fingleton, Chief Executive of the OFT, says, “Although the current economic climate may result in an increase in the number of failing firm cases, we will continue to scrutinise such claims carefully to ensure competition is protected. Given the overwhelming evidence pointing in favour of a failing firm defence in this case we did not consider it necessary to undertake a detailed market analysis, enabling us to carry out our investigation in a more proportionate and timely manner.”

The stores HMV proposes to acquire are in: Peterborough, Plymouth, Southend, Glasgow Silverburn, Glasgow Fort, Bournemouth Castlepoint, Salisbury, Crewe, Teeside, Glasgow Buchanon Galleries, Croydon, Nottingham, Fulham, Hastings and Manchester Arndale Centre.

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