ACCC gives all-clear to $2.3b auto dealer merger

The Australian Competition and Consumer Commission has given a conditional green light to a$2.3 billion merger of Australia’s two biggest car dealership groups after a divestment of dealerships in the Newcastle region.The competition regulator said the buyout by AP Eagers of its main rival Automotive Holdings Group hadn’t raised competition concerns in Melbourne, Sydney or Brisbane, where there were enough rivals to compete at a local level.

The ACCC, however, did have ”significant concerns” about the Newcastle and Hunter Valley region, but a $54 million divestment of the Kloster Motor Group announced on July 5 by AP Eagers has appeased the regulator.

A divestment in the Newcastle region has been enough to satisfy the ACCC to conditionally allow a $2.3 billion auto dealership merger.

ACCC Commissioner Stephen Ridgeway said on Thursday that without the divestment, a combined AP Eagers and AHG would have owned about half of the 78 dealerships in the Newcastle and Hunter Valley region.

This would have been untenable, and potentially forced up the prices paid for new cars by consumers in that region.

Mr Ridgeway said while consumers can make inquiries and ”shop around” online they still usually need to visit a vehicle dealership in person to negotiate the nest possible price on a new car. It was important that customers have access to a range of competing dealers in their local area, Mr Ridgeway said.

This article is from The Australian Financial Review, you can read the full article here:

https://www.afr.com/companies/transport/accc-gives-all-clear-to-2-3b-auto-dealer-merger-20190725-p52akv