On December 18, 2019, the FCO prohibited cash handling service provider Loomis AB’s acquisition of its competitor Ziemann Sicherheit Holding GmbH (“Ziemann”).[1] Loomis AB and Ziemann are the third and second-largest cash handling service providers in a number of regional markets in the west and north of Germany behind market leader Prosegur.

The FCO held that the proposed merger would have reduced the number of significant competitors from three to two in several already highly concentrated regional markets in the west and north of Germany.[2] The FCO found that other competitors were only regionally active small and medium-sized companies with low market shares and thus not able to exert a significant competitive constraint on the merging parties. The FCO found that already today, there is only limited competition on prices and conditions. In addition, switching options for customers are limited and the market is characterized by a high degree of customer loyalty. The FCO concluded that the transaction would thus permit the merging parties to raise prices or to otherwise impair their offering conditions.

While the parties had offered to sell customer contracts and the pertaining infrastructure to remedy the FCO’s concerns, the FCO did not consider these commitments suitable to eliminate the competition concerns. In particular, the FCO’s market testing revealed that (i) a significant number of customers would likely not be willing to switch the provider and (ii) many of those who were willing to do so, would likely rather switch to the market leader Prosegur than to the prospective buyers of the customer contracts. The FCO considered this as detrimental to competition as the proposed merger itself. The FCO’s decision is final and draws a provisional line under the ongoing market consolidation in this industry.[3]

This case shows that the sale of customer contracts may well be suitable to remedy competition concerns, but only where there are reasonable options to switch to the prospective buyer from a customer perspective.

[1]              Case B9-80/19. FCO Press Release, December 18, 2019, available in English here; FCO Case Summary, February 10, 2020, only available in German here.

[2]              Together with Prosegur, the parties would have held around 80% of the overall market volume whereas the remaining 20% would have been distributed over 30 smaller cash handling service providers with different regional focuses.

[3]              See inter alia Prosegur/Brink’s (B4-18/13), FCO decision of July 18, 2013, only available in German here, and Ziemann/Unicorn (B4-44/13), FCO decision of July 18, 2013, only available in German here. In 2018, Loomis acquired Kötter Security’s cash handling business. A Press Release dated January 17, 2018 from Kötter is only available in German here.