DURALAY INTERNATIONAL HOLDINGS LTD/ GATES CONSUMER & INDUSTRIAL MERGER INQUIRY

REMEDIES STATEMENT

The Competition Commission (the Commission) has sent remedies letters, on a purely hypothetical basis, to the main parties, Duralay International Holdings Ltd (Duralay) and Gates (UK) Ltd, in its inquiry into the acquisition of Gates Consumer & Industrial (Gates C&I) by Duralay.

The Commission has as yet reached no conclusions on any matter, in particular as to whether the acquisition of Gates C&I by Duralay operates or might be expected to operate against the public interest. However, if the Commission reached any adverse findings on the acquisition, it would wish to make appropriate recommendations for remedies to the Secretary of State. This statement of hypothetical remedies is being made public to inform all interested persons, should they wish to comment or to raise further points with the Commission. Any such comments should reach the Commission by Tuesday 11 September.

Three possible types of recommendation are being raised with the parties:

a) not allowing the merger to proceed;

b) structural remedies;

c) price and other controls.

These recommendations would be designed to address one or more of the matters set out in the Issues Statement, in particular any adverse effects on prices and competition in the underlay and accessories markets.

a) Not allowing the merger to proceed

b) Structural remedies

i. Whether the merger should be permitted subject to the sale of any one or more of the production or distribution operations of either party.

ii. Whether Duralay or Gates C&I should be required to divest a percentage of their combined sponge rubber and PU underlay production capacity.

c) Price and other controls

Whether, in order to address any possible adverse effects on competition in the sale of underlay or gripper, measures should be put in place to:

i. Cap the prices of underlay or gripper charged by the merged company, by linking such prices to RPI inflation or changes in raw material costs.

ii. Increase price transparency in the sale of underlay or gripper, for example by requiring the merged company to publish and adhere to price lists and details of volume discounts or rebates offered.

iii. Prevent the merged company from offering one of its product lines (for example, gripper) only on condition that the customer also purchase other product lines (for example, underlay).

Notes to editors

1.The Duralay/Gates reference was made by the Secretary of State for Trade and Industry, under section 64(8) of the Fair Trading Act 1973, on 28 June 2001 (see DTI press release P/2001/340). No conclusions will be reached about whether any matters may be expected to operate against the public interest until the Commission submits its report to the Secretary of State on or before 18 October 2001.

2. The Statement of Issues were set out in Competition Commission News Release 28/01, dated 14 August 2001.

3. Mrs Denise Kingsmill, a deputy chairman of the Commission, is chairing the inquiry. The other members of the Group conducting the inquiry are Mr Arthur Pryor, Professor Anthony Steele and Mr Alan Young.

4. Further information can be obtained from the Competition Commission website at www.competition-commission.org.uk/inquiries/ref.htm.

5. Press enquiries should be directed to: Francis Royle, Press Officer Tel: 020 7271 0242.