The UK competition watchdog has found that the merger of Noble and Maersk Drilling could increase operating costs for oil and gas producers in the North Sea.
In February, the Competition and Markets Authority (CMA) opened an investigation into the approximately £2.6bn anticipated merger. Following its phase 1 investigation, the CMA has discovered the deal raises competition concerns in the supply of jackup rigs for offshore drilling in the area comprising the UK, Denmark and the Netherlands.
The CMA raised concerns that the combined company would not face sufficient competition after the merger, which could lead to higher prices and lower quality services. Noble and Maersk Drilling are two of the four main suppliers in this market and have frequently competed against each other for contracts in the past.
It also warned that if the merging businesses are unable to address the concerns, the deal will be referred for an in-depth phase 2 investigation, to be carried out by a group of independent CMA panel members.
Earlier this month, Splash reported that offshore drillers expect a necessary sale of certain jackups currently located in the North Sea to obtain conditional antitrust clearance from the CMA. Noble and Maersk Drilling now have five working days to offer proposals to the CMA to address the competition concerns identified. The CMA would then have a further five working days to consider whether to accept these in principle instead of referring the case to a phase 2 investigation.
The proposed merger has already been approved by the competition authorities in Brazil, Norway, and the Republic of Trinidad and Tobago. The only outstanding clearances are in Angola and the UK. Noble and Maersk anticipate the Angolan authorities will approve the deal this month.