VTech could face an investigation over competition concerns arising from its completed merger with LeapFrog.
The Competition and Markets Authority’s (CMA) initial investigation 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. At present, LeapFrog is the only one of the two 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 25th 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 two investigation.
Kate Collyer, deputy chief economic adviser and decision maker in this case, said: “VTech and LeapFrog are two of the largest and best known brands supplying electronic toys and learning products for children. Retailers see them as close rivals and rely on competition between the companies to keep prices down. We’re concerned that the merger could lead to prices rising, the quality of products going downhill or the range on offer being reduced. Given this, the merger warrants an in-depth investigation – unless VTech is able to offer suitable undertakings to address our concerns.”