AP Eagers Limited - acquisition of Frost Ford

Summary

A.P. Eagers Ltd - completed acquisition of Frost Motor Group

Market definition

For the purposes of this assessment, the following narrow market definitions were adopted:
1) Northern Territory market for fleet car distribution;
2) Darwin market for new vehicle retailing;
3) Darwin market for used vehicle retailing; and
4) Darwin market for vehicle servicing.
It is noted that even if broader market definitions were adopted, the conclusion would be unchanged in this case.

Competition analysis

The ACCC concluded that the acquisition was unlikely to have led to a substantial lessening of competition in the Northern Territory market for fleet car distribution. A.P. Eagers Ltd and Frost Motor Group represented different manufacturers. The ACCC found that the predominant role of national manufacturers in negotiating fleet sales provided fleet dealers with very limited opportunities to increase margins and the merger did not increase the merged business's share of vehicles supplied for any individual make.

The ACCC concluded that the acquisition was unlikely to have led to a substantial lessening of competition in the Darwin markets for new vehicle retailing and used vehicle retailing due to the substantial number of remaining competitors, low barriers to entry into used car retailing, the degree of substitutability between new and used cars, and some degree of countervailing power held by manufacturers and customers against car dealers.

The ACCC concluded that the acquisition was unlikely to have led to a substantial lessening of competition in the Darwin market for vehicle servicing given the substantial number of remaining competitors.