On 2 October 2014, the ACCC demonstrated that, what can sometimes be perceived as a difficult path for merger applicants, can be a well-lubricated machine, with three high profile transactions achieving clearance through the informal merger review process:
- Reckitt Benckiser Brand Limited’s proposed acquisition of the K-Y brand from Johnson & Johnson;
- Tabcorp Group’s proposed acquisition of ACTTAB; and
- Expedia, Inc.’s proposed acquisition of ASX-listed Wotif.com Holdings Ltd (ASX: WTF).
K-Y acquisition slides through to home base
The ACCC considered Reckitt Benckiser’s topical acquisition in the context of the national market for personal lubricant products. Although the ACCC determined that, post-acquisition Reckitt Benckiser (which owns the Durex brand) would have a large share of the personal lubricants market sold via grocery and pharmacy channels, the “Durex and K-Y product lines were not particularly close competitors due to differences in packaging marketing and target customers”.
The ACCC determined that there would continue to be competitive constraints placed on Reckitt Benckiser’s ability to raise prices for personal lubricants products due to large alternative suppliers such as Ansell and Four Seasons. The ACCC also found that supermarkets and pharmacies were willing to stock smaller suppliers such as Wet Stuff and Sylk.
The ACCC concluded that it was unlikely that the acquisition would substantially lessen competition in the supply of personal lubricant products or raise other competition concerns in any other markets in which Reckitt Benckiser operates.
Tabcorp picks a winner with ACTTAB
Tabcorp looks set to collect on its punt to acquire the ACT Government’s gaming business, ACTTAB, with the ACCC declaring the transaction a certain starter from a competition perspective. The ACCC’s competition assessment focussed on the national market for the supply of wagering products and services as well as the market for the supply of off-course retail totalisator wagering products and services in the ACT.
In making its assessment of whether the acquisition would allow Tabcorp “to offer punters less favourable odds, increase its commission fees or otherwise degrade the quality of its wagering products”, the ACCC found that Tabcorp and ACTTAB were not vigorous competitors in wagering markets. The ACCC determined that there would only be a marginal increase in concentration, that there was limited overlap in local retail operations in the ACT and that there would only be a minimal increase in Tabcorp’s share of the national wagering market. The ACCC also considered that there would remain sufficient competitive constraints on Tabcorp by way of corporate bookmakers and state-based operators.
Expedia, please continue to checkout
The ACCC’s by no means leisurely pace continued with the ACCC providing confirmation that global online travel agency, Expedia, could (from a competition perspective) proceed with its acquisition of Australia-based online travel agency, Wotif. The ACCC considered that Expedia and Wotif’s businesses overlapped in a number of areas for online booking services, with the primary area of overlap being accommodation.
The ACCC commenced market enquiries in early August 2014 and released its Statement of Issues on 4 September 2014 seeking further comments on possible competition concerns relating to the potential for Expedia to increase the commission rates charged to accommodation providers. However, the ACCC’s public competition assessment (which is yet to be published – watch this space) found that the online accommodation distribution market has undergone rapid change in recent years. Most notably, the ACCC determined that this change had resulted in the entry of Booking.com (now the largest online travel agency in Australia) as well as the “increasing importance of metasearch sites such as TripAdvisor” that aggregate accommodation information and allow accommodation providers to deal directly with consumers.
Ultimately, the ACCC considered that the acquisition was “unlikely to diminish the dynamic nature of the industry” and not substantially lessen competition.
With all this recent merger clearance activity, and the festive season fast approaching, the ACCC may need to startsearching for holiday ideas…