Good news and perhaps not so good news yesterday from competition regulator, the ACCC on two big deals.
First up, the good news is that the creation of the country’s biggest car dealer remains on track after the bidder, AP Eagers, agreed to sell some assets to allow the bid for Automotive Holdings to proceed.
The ACCC said it had conditionally authorised AP Eagers’ proposed acquisition of Automotive Holdings Group (AHG), following an undertaking from AP Eagers to sell its existing new car dealerships in the Newcastle and Hunter Valley region of NSW to a third party.
The authorisation will not come into force until August 15 to allow the sale of the Hunter Valley dealerships in question and to allow for any other opposition or issues to be raised.
The merger did not raise concerns nationally, or in Melbourne, Sydney, and Brisbane, where the overlap between the operations of AP Eagers and AHG is limited and there is sufficient competition from other dealerships and suppliers.
However, significant concerns were raised in the Newcastle and Hunter Valley region where AHG is AP Eagers’ closest competitor and the two dominant the car selling sector.
“We were concerned that a combined AP Eagers and AHG would own about half of the 78 dealerships in the Newcastle and Hunter Valley region, and in metropolitan Newcastle, about three-quarters of the dealerships that sell the top ten car brands,” ACCC Commissioner Stephen Ridgeway said in a statement yesterday.
“If we had allowed AP Eagers to combine its dealerships with AHG’s in this region, the reduction in competition in that market may have meant consumers would pay more for new cars.”
“Although enquiries can be made over the phone or online, consumers usually still need to visit a dealership to negotiate the best possible price on a new car,” Mr. Ridgeway said.
“This limited ability to ‘shop around’ online to understand the actual price you would pay for a new car means it is important that customers have access to a range of competing dealers in their local area.”
Under the court-enforceable undertaking, AP Eagers will sell its new car dealerships and related businesses in the Newcastle and Hunter Valley region to an ACCC approved, independent purchaser. However, it will retain the AHG new car dealerships in the region that it proposes to acquire.
“AP Eagers’ divestiture means there will be no increase in market concentration in the Newcastle and Hunter Valley region,” Mr. Ridgeway said.
As announced on July 5, 2019, AP Eagers has entered into a non-binding heads of agreement for the sale of the Klosters business in Newcastle and the Hunter Valley to the Tony White Group and APE Eagers said yesterday negotiation of that transaction is progressing.
AP Eager already has a controlling interest in AHG through its own 28% plus stake and provisional acceptances from shareholders pending the ACCC decision.
