The Australian Competition and Consumer Commission will not oppose the acquisition of the Yarra Trams franchise by Metrolink.
In June 1999 the Victorian Government awarded a 12 year franchise to Metrolink to operate Yarra Trams. Swanston Trams, Hillside Trains and Bayside Trains were awarded to other operators.
Transfield Pty Ltd owns a 50% interest in Metrolink. It also holds a 10% interest in Transurban City Link Ltd, and a 50% interest in Translink Operations which has been awarded a long term contract to operate Melbourne City Link.
Some concerns were raised that common ownership between Yarra Trams and Melbourne City Link may lead to a reduction in competition in the Melbourne metropolitan transport market. The nature of these concerns was that the owners of the Melbourne City Link may try to "downgrade" the level of tram services provided in order to encourage consumers to use the Melbourne City Link.
The ACCC considered this matter under Section 50 of the Trade Practices Act 1974 which prohibits mergers and acquisitions that are likely to result in a substantial lessening of competition.
The ACCC found that there was limited potential for competitive overlap between Yarra Trams routes and the Melbourne City Link. In the small number of the areas where City Link and Yarra Trams may be considered to provide competing transport options, it was found that other options, including public roads and train services would ensure significant competition. Also, the ACCC has been advised by the Victorian Government that Metrolink would not be able to increase prices or decrease services on Yarra Trams routes under the terms of its franchising arrangement. Under the terms of the franchising arrangement, Metrolink will suffer financial losses if it does not increase patronage substantially and accordingly has incentives to try to maximise the competitive potential of Yarra Trams.
On this basis the ACCC determined that the acquisition was unlikely to have a substantial effect on competition. Nevertheless, as with all merger matters, the
ACCC reserves the right to reconsider its decision if further material evidence comes to light, or circumstances change. Accordingly, the ACCC will continue to monitor the situation.
In June 1999 the Victorian Government awarded a 12 year franchise to Metrolink to operate Yarra Trams. Swanston Trams, Hillside Trains and Bayside Trains were awarded to other operators.
Transfield Pty Ltd owns a 50% interest in Metrolink. It also holds a 10% interest in Transurban City Link Ltd, and a 50% interest in Translink Operations which has been awarded a long term contract to operate Melbourne City Link.
Some concerns were raised that common ownership between Yarra Trams and Melbourne City Link may lead to a reduction in competition in the Melbourne metropolitan transport market. The nature of these concerns was that the owners of the Melbourne City Link may try to "downgrade" the level of tram services provided in order to encourage consumers to use the Melbourne City Link.
The ACCC considered this matter under Section 50 of the Trade Practices Act 1974 which prohibits mergers and acquisitions that are likely to result in a substantial lessening of competition.
The ACCC found that there was limited potential for competitive overlap between Yarra Trams routes and the Melbourne City Link. In the small number of the areas where City Link and Yarra Trams may be considered to provide competing transport options, it was found that other options, including public roads and train services would ensure significant competition. Also, the ACCC has been advised by the Victorian Government that Metrolink would not be able to increase prices or decrease services on Yarra Trams routes under the terms of its franchising arrangement. Under the terms of the franchising arrangement, Metrolink will suffer financial losses if it does not increase patronage substantially and accordingly has incentives to try to maximise the competitive potential of Yarra Trams.
On this basis the ACCC determined that the acquisition was unlikely to have a substantial effect on competition. Nevertheless, as with all merger matters, the
ACCC reserves the right to reconsider its decision if further material evidence comes to light, or circumstances change. Accordingly, the ACCC will continue to monitor the situation.