Acquirer: Ray Fry Services Pty Ltd; Target: Cairns Cruising Yacht Squadron

Summary

Ray Fry Services Pty Ltd ("Norship") has entered into an agreement (the "Management Agreement") with the Cairns Cruising Yacht Squadron ("CCYS") whereby Norship will acquire CCYS' boat lift facility and manage its boat haulage and work yard business for an initial term of five years. The Management Agreement fell for consideration by the Commission under both s50 and s45 of the Act.

Market definition

The market for haulage and hard-standing for small boats (<40 tonnes) in the Cairns area; and
The market the spray-painting services for small boats (<40 tonnes) in the Cairns area

Competition analysis

Norship operates a boat haulage and hard-standing/ repair facility in Cairns catering primarily to large and medium size commercial boats. CCYS is a not-for-profit organisation and operates a haulage and hard standing/repair facility catering primarily to small boats owned by its members. The size of boat which can be handled by CCYS is limited by the capacity of its Travelift (40 tonnes).

The market for haulage and hard-standing for small boats
Although no market share data was available, it was considered that there was only a small amount of competitive overlap between CCYS and Norship. Further it was considered that a number of other market participants would continue to offer a competitive constraint on Norship following the commencement of the Management Agreement, including the Coconut Slipway which provides haulage and hard-standing facilities for small boats, and the Big Boat Shed, which provides hard standing and repair facilities for small boats.

The Commission also noted CCYS' submission that it would likely exit the market absent the Management Agreement. In this regard the Commisson considered that the fact that CCYS' directors, representing the club's members (being the ultimate end-consumers of the relevant services), had elected to enter into an agreement with Norship in preference to other options available to CCYS, suggested that the Management Agreement likely represented an equally or more favourable outcome for end-consumers of CCYS' services that other options available to the club.

Market for spray-painting services for small boats
The Management Agreement will affect the market for spray-painting services for small boats in Cairns as Norship's spray painter (rather than a contractor formerly engaged by CCYS) will operate in the CCYS yard following commencement of the agreement. The Management Agreement was not considered likely to result in a substantial lessening of competition in this market owing to ongoing competition from other spray painting operators for small boats, namely Phoenix Protective Coatings operating at the Big Boat Shed and various independent operators. It is noted generally that restrictions on the use of tradespeople in Cairns boat yards are the subject of a separate investigation by the Commission.

Merger type

Horizontal

Guidelines thresholds

Unknown

Imports above 10%

N/A

Initiation

Complaint

ANZSIC code

2822