The UK Competition and Markets Authority (CMA) has found that woolen yarn producer Danspin’s purchase of competitor Lawton Yarns poses serious competition concerns for carpet manufacturers. CMA, which has been investigating the completed merger of both, feels the new firm could increase prices or reduce yarn supply, potentially pushing woolen carpet prices.
Both companies provide yarn that is used to make woolen carpets nationally and across the world. In the United Kingdom, one of the biggest markets for this particular carpet, Danspin and Lawton Yarns supply the majority of yarn used in its manufacturing.
In its initial Phase 1 investigation, the CMA found that apart from being the two main producers of woollen yarn prior to their merger, Danspin and Lawton Yarns were each other’s main competitors and faced little rivalry from other businesses. Choice for carpet manufacturers following the merger would therefore be particularly limited, as the other main competitors in this sector have a small UK presence and would not pose a healthy challenge to the merged company, according to an official release.
Danspin bought Lawton Yarns out of administration in May 2019, following a competitive process against other interested purchasers. Danspin has until November 12 to offer solutions to resolve the CMA’s concerns, otherwise the merger will be referred for an in-depth Phase 2 investigation.
