The UK government’s Office of Fair Trading (OFT) has decided not to refer the completed acquisition by Inchcape of European Motor Holdings to The Competition Commission on the condition that Inchcape provides satisfactory divestment undertakings to address competition concerns.

The OFT has identified that in the northern Welsh Marches the merger may substantially lessen competition in the provision of servicing and repair for new and nearly new Volkswagen cars under warranty. Inchcape has offered to divest one of its dealerships within this area to address the concerns raised by the OFT.

Vincent Smith, OFT senior director for competition said: “The OFT’s decision will protect owners of new and nearly-new VWs from higher repair and servicing charges in the area around Wrexham and Oswestry. The merger between Inchcape and EMH would put the only two authorised dealerships for VW’s in that area under common ownership, and this may lead to a substantial lessening of competition in terms of the choices available to customers.

“Previous investigations into car dealerships and evidence from third parties obtained during this investigation show that customers still predominantly have their cars serviced and repaired under warranty at authorised dealerships. The OFT will now further consider whether the proposed divestment is sufficient to restore competition for the servicing of new and nearly new cars in the northern Welsh Marches area.”