ACCC has Covs sale under the microscope

Statement of issues centres on competition concerns related to AHG subsidiary, especially in WA

ACCC has Covs sale under the microscope
The proposed sale of Covs faces more hurdles.


The transport and logistic sector is again in Australian Competition and Consumer Commission (ACCC) sights over a proposed takeover.

Fresh from raising concerns on Bookfields’ pending Asciano buy, the ACCC has done the same for GPC Asia Pacific’s proposed purchase of the Covs Parts business from Automotive Holdings Group (AHG).

And the competition watchdog has done it in the same way, through a ‘statement of issues’ seeking industry views and further information following an initial investigation.

Significant competitive harm, the loss of choice for trade customers and the likely hindering of new market entrants are main priorities the ACCC sees needing resolution before the deal, valued at $43-45 million when announced in July, can proceed.

GPC, which owns Repco and Ashdown-Ingram, is Australasia’s largest automotive aftermarket parts, accessories and solutions group.

 "The ACCC’s preliminary view is that the proposed acquisition would raise competition concerns in the supply of automotive parts and accessories to trade customers in nine regional towns in Western Australia," ACCC chairman Rod Sims says.

"Market feedback indicates that following the proposed acquisition, GPC would be either the only supplier of automotive parts to trade customers, or one of two suppliers in these towns.

"The proposed acquisition would remove GPC’s closest competitor in these regional towns, increasing GPC’s ability and incentive to raise prices or decrease service levels to trade customers.

"The ACCC is also considering the likelihood of an automotive parts provider expanding its supply or entering into any of the local markets.

"Covs Parts is the only other generalist automotive parts supplier of a scale and scope in regional Western Australia that matches GPC."

The statement of issues provides the ACCC’s preliminary views on the proposed acquisition, the lines of further inquiry that it wishes to undertake and invites interested parties to submit information to assist in its assessment of the issues, it says.

Submissions are sought in response to it by November 5 before a final decision November 26.

Brookfield is reportedly addressing the ACCC's statement of issues in a bid for a go-ahead.

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