Downer EDI Ltd (t/a Works Infrastructure Pty Ltd) - proposed acquisition of Emoleum

Summary

Downer EDI Ltd t/a Works Infrastructure Pty Ltd - proposed acquisition of Emoleum

Market definition

The national markets for the supply of:
1. routine road maintenance services for projects with a value less than $40 million; and
2. additional road maintenance services including bitumen spray sealing, asphalt paving, road profiling, slurry surfacing and the supply of emulsion, for projects with a value less than $40 million.

Competition analysis

On 21 February 2006, the ACCC decided not to oppose the proposed acquisition of Emoleum by Downer EDI t/a Works Infrastructure. It appears that in the national market for the supply of routine road maintenance services for projects of a value under $40 million, the merged entity would face competition from NSW and QLD State and local road authorities, Pioneer and Transfield Services. In the national market for additional road maintenance services (such as bitumen spray sealing, asphalt paving, road profiling, slurry surfacing and the supply of emulsion), the merged entity would continue to face competition from Pioneer, FRH and Boral. The ACCC also considered that barriers to entry and expansion for both markets are low.

Further, the ACCC considered that State road authorities, being the major customers of the merger parties, were well-informed customers that undertake transparent tender processes and, as such, hold significant countervailing power.

After consideration of the merger factors the ACCC formed the view that the proposed acquisition is unlikely to result in a substantial lessening of competition.

Merger type

Horizontal

Initiation

Parties