Summary
On 1 March 2005, the ACCC formed the view that the proposed acquisition would be unlikely to substantially lessen competition in the markets for toll road construction and ownership; tolling and customer management services (TCM services); and the supply of electronic toll collection (ETC) technology.Market definition
The relevant markets were considered to be:* the toll road construction and ownership market;
* the market for tolling and customer management services (TCM services); and
* the market for the supply of electronic toll collection (ETC) technology.
Competition analysis
The ACCC considered that proposed acquisition will not result in a substantial lessening of competition in any of the relevant markets for the following reasons:In the market for toll road construction and ownership:
- the proposed acquisition is unlikely to result in any aggregation in market power;
- barriers to entry do not appear to be insurmountable since competition is generally ?for? the toll road contract;
- there will remain a number of strong competitors who are capable of bidding for, funding and operating toll roads; and
- State governments are likely to exert considerable countervailing power in acquiring the services of construction and investment companies to build and manage the roads.
In the market for TCM services:
- prices charged to motorists are regulated and will remain regulated following the acquisition;
- barriers to entry are unlikely to be raised as a result of the merger; and
- a number of competing providers of TCM services will continue to provide TCM services in the Sydney area (as well as in other areas in Australia).
In the market for ETC technology:
- the presence of a number of other tollroad operators who acquire ETC technology ought to constrain the ability of the merger parties to exercise market power;
- a reliance on competitors for a significant portion of revenue means it is unlikely that the merger parties will be able to leverage any market power in relation to negotiation of roaming fees; and
- the market for ETC technology is competitive and dynamic, involving many competing companies selling various technology components.
Merger type
Horizontal
Initiation
Press