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Competition concerns force Pendragon to get rid of eight dealerships

Pendragon is to sell eight dealerships in England and Scotland to avoid breaking anti-competition rules relating to its takeover of Reg Vardy.

The OFT has decided today not to refer the completed acquisition by Pendragon Plc of Reg Vardy Plc to the Competition Commission on the condition the dealer group addresses concerns about it dominating certain market areas.

The OFT has identified four areas where the merger of the car dealerships businesses may “substantially lessen competition in the provision of servicing and repair for new cars under warranty”.

Pendragon has offered to sell eight outlets within these areas.

The areas of concern are made up of the following dealerships: Vauxhall in Castleford, Leeds and Wakefield, Vauxhall in Airdrie, East Kilbride and Motherwell, Vauxhall in Hartlepool and Land Rover in Northamptonshire.

Pendragon has 40 Vauxhall dealerships and 34 Land Rover.

Vincent Smith, OFT director of competition enforcement, said: “The findings of the recent independent evaluation study for the OFT on car warranties, and evidence from third parties obtained during this investigation, show that customers still predominantly have their new cars serviced and repaired at franchised dealerships. This merger leads to a substantial lessening of competition in terms of the choices available to such customers in a small number of local areas. The OFT will now proceed to consider further whether the proposed divestments are sufficient to restore competition for the servicing of new cars in these local areas.”

Pendragon said it welcomed the decision.

In a statement the company said: “We will now work closely with the OFT to reach agreement on appropriate undertakings to address the concerns of the OFT relating to the prospect of the substantial lessening of competition in relation to the servicing of cars less than three years old in four local areas.”

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