The Australian Competition and Consumer Commission will not oppose the proposed acquisition by Tyco of Plessey Asia Pacific Pty Ltd's traffic control business, ACCC Chairman, Professor Allan Fels, said today.
Tyco recently acquired the Australian traffic control business of the Dutch multinational, Philips, which represented new entry by Tyco to the supply of traffic controllers in Australia. Both Tyco and Plessey manufacture traffic controllers which are designed to be used with the Sydney Coordinated Adaptive Traffic System (SCATS), which monitors traffic flows and adjusts traffic signals to minimise congestion. SCATS is used for urban traffic control in every Australian State and Territory except Queensland.
"The ACCC conducted extensive market inquiries, involving the State and Territory road traffic authorities and potential Australian and overseas competitors of the merger parties to determine the likely effect on competition of the proposed acquisition", Professor Fels said.
"The ACCC concluded that new entry to the supply of SCATS-compatible traffic controllers in the foreseeable future, the limited competitive presence of Plessey in the Australian market, and the countervailing power of the NSW Roads & Traffic Authority mean that the proposed acquisition is unlikely to substantially lessen competition.
"Although the Plessey controller is considered to be SCATS-compatible, Plessey has not received RTA type approval for its controller and has supplied only one Australian road traffic authority in the past five years.
"Moreover, there is a significant threat of new entry to the supply of SCATS-compatible controllers in the foreseeable future. In particular, Aldridge Traffic Systems and Quick Turn Circuits are seeking to develop and obtain the necessary approvals to supply SCATS-compatible controllers in Australia.
"The ACCC also considers that the NSW RTA is likely to possess countervailing power, arising from its ownership and licensing of SCATS, that may be sufficient to resist any exercise of market power by the merged firm.
"Accordingly the ACCC has decided not to oppose the proposed acquisition".