The UK’s competition watchdog has approved a £2.2bn oil merger between Wood Group and Amec Foster Wheeler.

The companies agreed to sell off “almost all” assets which contribute to engineering, construction and maintenance services in its upstream offshore oil and gas business in the UK.

The decision came soon after the Competition Markets Authority (CMA) raised competition concerns over how the merger could affect the supply of services to the UK oil industry.

The deal, which was first announced in March, was therefore not subject to an in-depth investigation because the companies acted so quickly to address the CMA’s concerns.

“Since we announced the deal in March, both parties have maintained a relentless focus on keeping on schedule,” said Robin Watson, the chief executive of Aberdeen-based Wood Group.

A thorough investigation

Kate Collyer, deputy chief economic adviser at the CMA, said:

“It is crucial that competition is maintained in this major UK industry. We have therefore conducted a thorough investigation into this merger, and believe that the sale of Amec Foster Wheeler’s assets will address our concerns and ensure that customers in the North Sea continue to be able to obtain competitive bids.”

“The CMA is committed to conducting merger investigations as quickly and efficiently as possible.In this case, the CMA worked with the companies on a ‘twin-track’ approach, engaging with them on shaping remedies that might mitigate competition concerns, if any were found, whilst still investigating whether such concerns arose,” she added.

“This enabled us to promptly reach a final view on the proposed remedy after competition concerns were identified, helping to reduce uncertainty about the potential impact of the merger for customers within this industry.”

Jon Lewis, chief executive of Amec Foster Wheeler welcomed the CMA’s decision.

“We have made significant progress marketing Amec Foster Wheeler’s UK upstream oil and gas business to a range of high-quality bidders, which has helped to ensure that we will close the transaction in October, bringing the many benefits of the combined company to our clients, colleagues and shareholders,” he said.

Amec is a London-based consultancy with diverse operations, from supplying the UK Ministry of Defence with research and technology to advising on Heathrow’s third runway campaign.

The all-share merger will create a company with a combined value of about £5bn.