Merger of VTech and LeapFrog could face in-depth investigation in UK
VTech Holdings Ltd (VTech) and LeapFrog Enterprises Inc (LeapFrog) are 2 of the 3 largest suppliers of toddler electronic learning toys and child laptops/tablets in the UK.
The Competition and Markets Authority’s (CMA) initial investigation has found that the companies compete closely in supplying these products to retailers and there are few other competitors.
The CMA also found that, in the absence of the merger, both companies would have been close competitors in the supply of child electronic reading systems, which involve the audio narration of an accompanying physical book. At present, LeapFrog is the only one of the 2 companies supplying these systems.
The CMA therefore believes that the merger could lead to a substantial lessening of competition in the market for these products which could lead to increased prices and a reduction in quality or choice for consumers.
VTech now has until 25 August to offer proposals to resolve the CMA’s competition concerns. If VTech does not offer such undertakings, or if the CMA does not accept the undertakings offered, the CMA will refer the merger for an in-depth phase 2 investigation. ■