ACCC Warns On Cars, Petrol, Childcare
Woof - Watchdog barks: A busy morning yesterday for the ACCC as it bagged new car companies for breaching consumer rights and cost rip offs and raised doubts about two big takeovers - the first is the proposed purchase by BP of Woolworths petrol stations and associated convenience stores, the second is the more controversial attempt by secretive US private equity company, Bain Capital to become the biggest for profit offer of before and after child care services.
The two announcements came a few hours after the Commission warned the new car dealers (https://www.accc.gov.au/media-release/new-car-industry-put-on-notice) of not adhering to Australian consumer law in some cases. The ACCC said it had received more than 10,000 complaints about new car manufacturers in the last two years:
“The ACCC is deeply concerned about the level of non-compliance with the Australian Consumer Law in the new car industry. We will continue to take action to address failures by car manufacturers and retailers to provide the remedies to which consumers are entitled,” Commission chair, Rod Sims said.
The ACCC then issued two statements minutes apart this morning that the BP Woolies deal and the child care merger had raised “preliminary concerns” about the impact of both deals on competition.
On the Woolies deal it said (https://www.accc.gov.au/media-release/accc-releases-statement-of-issues-on-bps-proposed-acquisition-of-woolworths-petrol-sites) about its preliminary view that the proposed BP acquisition may substantially lessen competition for the retail supply of fuel across metropolitan areas.
“The transaction would reduce the number of major rivals in fuel retailing. The transaction could see retailers face less competitive pressure to keep their prices low and as a result, motorists may end up paying more at the pump,” ACCC Chairman Rod Sims said. The ACCC said it had received submissions from a wide range of interested parties including industry associations, fuel retailers, wholesale fuel suppliers, and both corporate and individual consumers.
Another area of concern raised by market participants was the effect of the proposed acquisition on convenience groceries.“This is another part of the transaction that requires examination to see what the likely impact would be on competition, and prices,” Mr Sims said.
Woolworths in December said it had agreed to sell its 527 fuel convenience stores plus 16 development sites to BP, which already owns 350 retail sites in Australia and supplies a further 1,050 BP-branded sites.
Woolies shares eased 0.8% to $26.75.
And on the proposed move by Bain Capital to make itself the biggest child care company in the country The Commission said (https://www.accc.gov.au/media-release/accc-has-concerns-about-camp-australia-and-junior-adventures-merger) it had “raised preliminary competition concerns about Bain Capital’s proposal to combine Camp Australia Pty Ltd (Camp Australia) and Junior Adventures Group (JAG).”
The Commission said Camp Australia and JAG are the two largest commercial suppliers of before and after school care in Australia. JAG owns the OSHClub and Helping Hands brands.
“The ACCC’s primary concern is that the loss of competition between Camp Australia and JAG for the supply of before and after school care could result in higher prices for parents and lower quality care for students in some states,” ACCC Chairman Rod Sims said.
“The ACCC has received extensive feedback from interested parties, including schools and parents, expressing concern about the proposed acquisition.”The ACCC’s primary concerns relate to the parties’ Victoria, Western Australia, New South Wales, and Queensland operations where there is the greatest overlap. It is also continuing to investigate the effect of the proposed merger in the Australian Capital Territory and South Australia.
“The merger may also damage the interests of primary schools, who rely on competition between Camp Australia and JAG, to obtain the best possible deal for use of the school’s facilities,” Mr Sims said.
Across the country the merged company will control around 26% of the market, but in metropolitan areas it could be as high as 40%, and up to 44% in Melbourne. This is already a controversial deal with political heat about it rising in Canberra, Melbourne and Sydney.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.