Office of Fair Trading begins landlord scrutiny with Your Housing Group merger probe
Competition watchdog has housing in its sights
The government’s competition watchdog has launched an investigation into a 32,000-home housing association merger.
In a sector first, the Office of Fair Trading is probing the merger of Harvest Housing Group and Arena Housing Association, which joined together in April to form Your Housing Group.
Despite having been given the go-ahead by the housing regulator, the newly formed Your Housing Group, which operates in the north west, the midlands and Staffordshire, is subject to scrutiny over whether the deal breached competition guidelines.
The investigation is to establish whether the merger comes under OFT jurisdiction and whether it resulted in a substantial lessening in competition.
If it does, Your Housing Group, which has an annual turnover of £140 million, could be referred to the Competition Commission and forced to make changes to, or sell parts of, its business.
Brian Cronin, chief executive of Your Housing Group, was confident the merger did not exceed the OFT’s market share threshold of 25 per cent, but warned it was clear the watchdog planned to ramp up its scrutiny of the sector.
‘Regardless of what has happened in the past they are definitely looking at the sector. This is going to be an additional hurdle that associations are going to have to consider.’
‘The Homes and Communities Agency had approved this, so from our point of view we have done everything we should have.’
Triggers for investigation by the OFT are when the organisation being taken over has a turnover of more than £70 million, and when the resulting merger creates a 25 per cent control of market supply.
Arena Group had a turnover of £68.1 million, and Your Housing Group has provided the OFT with calculations that show its share of the market, assuming this is defined by local authority area, is around 20 per cent, falling short of the triggers.
Phil Gandy, chief executive of Symphony Housing Group, said the OFT had shown no interest in his organisation’s 39,000-home merger last August. ‘On the surface it appears a bit anomalous - in the north west there is plenty of “competition”.’
A spokesperson from the HCA said it was not required to check housing association mergers with the OFT.
She added: ‘We are aware of the case and are discussing with the OFT to understand any concerns they may have. As the social housing regulator, we consider any proposed mergers as part of our registrations process and in accordance with our published guidelines.’
Keith Jenkins, partner at law firm Winkworth Sherwood, said: ‘Where is the competition supposed to take place? There isn’t a “market” because of the nature of the provision of housing.’
The OFT declined to comment on ongoing investigations, but said the case did not necessarily indicate an increased sector-wide focus.