The Competition and Markets Authority (CMA) has initiated an investigation into the anticipated acquisition of ChampionX Corporation by Schlumberger Limited (SLB).
The CMA is assessing whether this merger could lead to a substantial lessening of competition (SLC) in the UK market, particularly in the supply of production chemical technologies (PCTs) and other vital oilfield services.
The CMA has determined that the merger notice submitted by SLB and ChampionX meets the legal requirements under Section 96(2) of the Enterprise Act 2002. Consequently, the regulatory body has set a deadline of March 27, 2025, to decide whether the merger should proceed to a Phase 2 investigation. The involved parties have until April 3, 2025, to propose undertakings to mitigate potential competition concerns.
SLB and ChampionX are both leading global suppliers of oilfield services, equipment, and technologies to exploration and production (E&P) companies. The CMA has identified several key product markets where the merger could significantly impact competition:
- Production Chemical Technologies (PCTs): Essential for maintaining asset integrity, optimizing production, and managing water treatment during oil and gas extraction.
- Poly-Crystalline Diamond (PCD) Bearings: High-performance components used in directional drilling operations.
- Directional Drilling Services with Rotary Steerable Systems (RSS): Advanced drilling technology that enhances well path precision.
- Quartz Pressure Sensors (QPSs) and Transducers: Critical instruments for monitoring downhole conditions.
- Permanent Downhole Gauges (PDGs): Used for data measurement and well completion processes.
The CMA has outlined three main concerns regarding the impact of the merger:
- Horizontal Unilateral Effects in PCT Supply: The merger could create a dominant entity with over 60% market share in the UK’s PCT market. Given the already concentrated nature of this sector, this consolidation may reduce competition and limit choices for E&P companies.
- Input Foreclosure in Directional Drilling Services: SLB, through ChampionX’s subsidiary US Synthetic, could restrict rival access to PCD bearings, harming competitors in the RSS sector.
- Input Foreclosure in PDG Supply: ChampionX, through its Quartzdyne business, dominates the market for Quartz Transducers. Post-merger, SLB could limit access to these components, disadvantaging rival PDG suppliers.
SLB is committed to collaborating with the CMA to address any outstanding concerns and is confident that the transaction will be cleared for closing, declare company.
To address these concerns, SLB and ChampionX must propose legally binding remedies by April 3, 2025. If the CMA deems these measures insufficient, it will escalate the case to a Phase 2 investigation, involving a more in-depth analysis of competitive effects and potential structural or behavioral remedies.
