Redfearn – formerly known as Rexam Glass Barnsley – was a wholly owned subsidiary of Rexam plc, but the packaging giant decided to move out of glass-making in the UK in May (see letsrecycle.com story).
 With the Redfearn Glass plant in Barnsley (above) as part of Rockware, the company would control 40% of the UK glass container market, the OFT says |
Rockware – through parent group Ardagh Glass – agreed to buy the business for 50 million in cash, but the Office of Fair Trading decided in August to refer the matter to the Competition Commission, the new guise of the Monopolies and Mergers Commission.
The companies are currently unable to comment on the situation while the acquisition is still subject to the legal process, but it is understood the decision from the Competition Commission could come within weeks.
Rockware
Rockware Glass operates four glass manufacturing sites in the UK with a total of nine furnaces and 23 production lines. Rockware's parent company Ardagh also includes the manufacture and sale of glass containers in Germany, Italy and Poland.
The company's UK operations have a turnover of about 180 million. Rockware uses more than 230,000 tonnes of recycled glass each year and represents one of the largest markets for recovered glass packaging waste.
Redfearn
Redfearn Glass runs a manufacturing plant in Barnsley that includes five furnaces and 13 production lines. The company's turnover in 2004 was just over 101 million.
The acquisition of Redfearn would see Rockware taking control of about 40% of the UK market for container glass, according to the OFT.
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The desired acquisition of Redfearn comes at a pivotal time in the UK glass container manufacturing industry, with a major new glass plant being developed in Cheshire by Quinn Glass.
Concerned
In referring the case to the Competition Commission, the OFT said: “The majority of customers contacted are concerned that the merger will lead to a reduction in competition, which had been expected to increase with the entry/expansion of Quinn Glass, and to prices being higher than they would otherwise have been. In contrast, all competitors are unconcerned as they believe there is over-supply in the sector, particularly given the capacity at Quinn Glass's new plant.”
Although the 120 million Quinn plant is currently the subject of a legal wrangle over its planning permission, Rockware has pointed to this new production capacity as evidence that there is still room in the market for healthy competition.
However, the OFT said it could find “few competitors who could state that they themselves had excess capacity. It also warned that before the merger, Rockware and Redfearn had been “close competitors and were likely to have represented each others' next best alternative for customers”.
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The OFT suggested after the merger, Rockware might have the “incentive and ability to set prices at a level higher than they would have been without the merger”.
Rockware has actually attempted to purchase Redfearn – then Redfearn National Glass Ltd – before. In 1977 both Rockware and similar-sized United Glass had tried to purchase the third-biggest glass manufacturing firm, but the Mergers and Monopolies Commission ruled in May 1978 that the deal would be contrary to the public interest.
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