On 9 October it was announced by the Competitions and Markets Authority that an initial enforcement order had been served under section 72(2) of the Enterprise Act 2002 on Rentokil Initial plc, in relation to the completed acquisition by Rentokil Initial plc of MPCL Limited (formerly known as Mitie Pest Control Limited).
This update follows on from the initial announcement of the acquisition posted on 1 October 2018.
The objective of the enforcement order is to ensure that the Rentokil and MPCL Limited (formerly Mitie Pest Control Ltd) (MPCL) businesses are kept separate for the duration of the Competitions and Markets Authority’s (CMA) investigation. This enforcement order covers the MPCL company that Rentokil acquired and the activities it carries out.
In an internal announcement to their own staff Rentokil explained: “The Competition and Markets Authority (CMA) told us that we must keep the MPCL business entirely separate from our existing pest control business while they investigate whether the possible merger is likely to affect competition. Until they have completed their investigation this means that we must treat MPCL as a competitor in exactly the same way as we always have done.”
This seems clear enough, however the same note to staff goes on to say: “RPC has agreed with Mitie Limited that it will provide pest control services to its FM customers under a Preferred Supplier Agreement. This note does not refer to the service that you are currently delivering as part of that Preferred Supplier Agreement, you are free to service those customers as you would any other FM customer, those are the customers listed on your portfolio.”
The subtlety of this is lost until you appreciate that this preferred supplier agreement is with Mitie Limited (not subject to the enforcement order) so Rentokil staff can, and are, taking on these customers previously serviced by Mitie Pest Control.
Pest approached Rentokil’s press office for a statement regarding this CMA investigation. A Rentokil spokesman advised the following: “We believe the deal will be great for customers, with customers getting Rentokil’s excellent service and access to RI’s leading-edge innovations and technology. We will obviously cooperate fully with the CMA process and we remain confident that the deal will be cleared in due course. No change for customers or role of employees – its business as usual.”
Well versed on handling CMA investigations
By now Rentokil must be well practised in handling these investigations by the CMA. A search on the CMA site, regarding pest control alone, reveals that:
- the acquisition of Connaught (Santia) was investigated but approved in July 2011
- the acquisition of Green Compliance was reviewed in 2014
- Rentokil is also currently undergoing an investigation regarding the merger with Cannon Hygiene in 2018, but only relating to the washroom activities
For those interested in such matters, in the official decision notice published in the Connaught investigation in 2011, a table based on Rentokil’s own figures 2011, showed their market shares for pest control (excluding fumigation) as below. (See page 13 of the decision notice.)
Since when of course, Rentokil has completed the acquisition of Connaught, and since then also Cannon Hygiene and now Mitie.
|Total (£[250-300] million)||100|
Source: Rentokil based on its own internal survey, 2009