The Australian Competition and Consumer Commission says it has concerns about AP Eagers’ $2.3 billion takeover of Automotive Holdings Group, due to a potential impact on competition in new car retailing in NSW.
ACCC acting chair Delia Rickard said the authority was seeking further feedback from market participants about this proposed transaction, in particular regarding the Newcastle/Hunter Valley region.
“A combined AP Eagers and AHG would operate 46 per cent of new car dealership sites in the Newcastle/Hunter Valley region, including those for the ten most popular brands, and runs 54 per cent of the dealership sites selling those brands,” she said.
“In metropolitan Newcastle alone, the combined company would operate 77 per cent of dealership sites selling the ten most popular brands.
“We believe local consumers generally don’t travel beyond the Newcastle/Hunter Valley region to buy new cars, and it is difficult to find out the final price for a car without visiting a dealership.”
However, the ACCC said its preliminary view was that the proposed acquisition was unlikely to substantially lessen competition for the supply of new cars in major cities on the east coast, such as Melbourne, Sydney and Brisbane.
The ACCC will make final decision by July 26.
In response, AP Eagers told the ASX it believed the merger would not substantially lessen competition in any market.
"Even in the few geographic areas where the activities of the two groups overlap, including Newcastle and the Hunter Valley, it is AP Eagers’ view that there will continue to be choice and competition," it said.
"AP Eagers has actively engaged with its stakeholders, including its manufacturing partners, who have been supportive of the transaction."
In May, AHG urged its shareholders to accept a revised offer from AP.
AP Eagers offered one share for every 3.6 AHG shares, instead of one for 3.8 AHG shares it proposed in April.
Prior to the takeover offer, AP was already AHG’s largest shareholder with a nearly 29 per cent stake.
