The ACCC has granted unconditional merger authorisation to Gumtree’s proposed acquisition of Cox Australia Media Solutions (Cox Media), allowing Gumtree Cars to be combined with Cox Media’s Carsguide and Autotrader sites.

“We authorised this merger because we concluded it was not likely to lead to a substantial lessening of competition, including in the supply of online automotive classifieds in Australia. Therefore it was not necessary to consider the public benefit limb of the authorisation test,” ACCC Chair Rod Sims said.

Carsales is the leading provider of online automotive classified advertising in Australia and is a significant competitive constraint on Gumtree and Cox Media. Facebook Marketplace is also a growing competitor to Gumtree and Cox Media in the supply of online automotive classifieds services.

“Our investigation showed that Carsales and Facebook Marketplace are likely to continue to provide significant competition in online automotive classifieds after Gumtree acquires Cox Media,” Mr Sims said.

“We also found that Gumtree and Cox Media focus on different segments, with Gumtree focussing on private seller listings and Cox Media focussing on dealer listings.”

The ACCC also investigated the impact of the acquisition on the supply of online display advertising on digital automotive content providers.

The ACCC was satisfied that the acquisition is unlikely to result in a reduction of competition for supplying online display advertising to advertisers wishing to target potential car buyers.

“Many advertisers use third parties to place targeted advertisements to individual consumers based on browsing history data on a wide range of websites. Further, we found there are a range of other digital automotive content providers where direct advertisers could place automotive-related advertising, including Drive, Carsales, GoAuto and digital versions of automotive print publications,” Mr Sims said.

The ACCC’s determination is available at Gumtree AU Pty Ltd proposed acquisition of Cox Australia Media Solutions Pty Ltd.

Background

Gumtree’s application is the second merger authorisation application following reforms in 2017 to the merger authorisation process, which reinstated the ACCC’s ability to consider applications for merger authorisation. Previously authorisation applications were made directly to the Australian Competition Tribunal.

Merger authorisation provides an alternative avenue for merger clearance to the informal merger review process, which is the most commonly used avenue used by merger parties. The authorisation process is public. If merger authorisation is granted, merger parties are exempt from the merger laws.

The ACCC may grant authorisation for a proposed merger if it is satisfied the merger is not likely to substantially lessen competition, or where the likely public benefits outweigh the likely public detriments.

Gumtree sought merger authorisation for its proposed acquisition of Cox Media. Gumtree (through Gumtree Cars) and Cox Media (through Carsguide/Autotrader) both offer online automotive classified advertising to private and dealer sellers in Australia. Gumtree and Cox both sell third parties display advertising space on their websites and mobile applications.

Gumtree is a subsidiary of eBay Classifieds Holding BV, whose ultimate parent company is eBay Inc. eBay operates a multi-category general classifieds website in Australia.

Cox Media is a subsidiary of Cox Automotive, which is 70 per cent owned by Cox Automotive International Sarl and 30 per cent owned by DealerMotive Ltd, a consortium of Australian dealer groups. Carsguide and Autotrader provide automotive editorial content and automotive classifieds.

The Full Court of the Federal Court has today delivered its judgment on the ACCC’s appeal in relation to proceedings brought to stop Pacific National’s acquisition of the Acacia Ridge Terminal in Brisbane by Aurizon (ASX: AZJ).

The ACCC had appealed the 2019 judgment of the Federal Court which held that the acquisition would not be likely to substantially lessen competition due to an undertaking that Pacific National had offered the Court.

While the ACCC was successful in relation to a number of legal issues, the Full Court found there was insufficient evidence to establish that the acquisition was likely to result in a substantial lessening of competition, and dismissed the ACCC’s appeal.

Although the majority of the Full Court agreed with the ACCC’s position on the meaning of ‘likely’, the case hinged on the ACCC establishing the likelihood of another player seeking to enter the market in the next five to ten years. The Full Court considered that the prospect of new entry was no more than speculative.

“This was a particularly important case for Australia’s merger laws, and the outcome demonstrates the real difficulty of applying the substantial lessening of competition provisions in the legislation,” ACCC Chair Rod Sims said.

The result of the Full Court’s decision is that Pacific National’s acquisition of the Acacia Ridge Terminal may proceed, without the access undertaking accepted by the trial judge.

“This is also a sad day for the economy, because the ACCC’s view is that the prospects of competition in rail freight have been significantly diminished and the impacts of this will be with us for more than a decade,” Mr Sims said.

The ACCC’s case was that Pacific National’s ownership of the Acacia Ridge Terminal would allow it to effectively prevent access to new entrants, entrenching Pacific National’s position as the dominant rail freight carrier on the east coast.

“We will now carefully consider the Full Court’s judgment. The ACCC will continue to consider what changes are needed to make Australia’s merger laws work in the way they need to, to safeguard the economy from highly concentrated markets,” Mr Sims said.

Notes to editors

The term ‘intermodal’ freight is used to describe the carriage of general freight usually in a container using two or more modes of transportation, such as truck and rail. ‘Intermodal rail linehaul’ refers to the rail leg of the movement of intermodal freight. ‘Steel rail linehaul’ refers to similar services that are provided in respect of steel products.

An intermodal terminal, such as the Acacia Ridge Terminal, comprises infrastructure with a connection to a rail line where containers can be transferred between transportation modes.

Background

The ACCC commenced proceedings on 18 July 2018 alleging that Pacific National’s acquisition of the Acacia Ridge Terminal from Aurizon would have the likely effect of substantially lessening competition in breach of section 50 of the Competition and Consumer Act 2010.

The ACCC was concerned that the acquisition of the Acacia Ridge Terminal would deter a new entrant from providing interstate linehaul services in competition with Pacific National.

The ACCC had commenced a public investigation of Aurizon’s proposed exit plans, including the proposed acquisitions by Pacific National of the Acacia Ridge Terminal and Queensland intermodal business on 27 October 2017. The ACCC issued a statement of issues on 15 March 2018.

The Federal Court dismissed the ACCC’s proceedings on 15 May 2019. The trial judge found that, with Pacific National’s undertaking offered to the Court, the acquisition of the Acacia Ridge Terminal would not be likely to substantially lessen competition.

The ACCC lodged an appeal on 27 June 2019. The appeal, and cross appeals by Pacific National and Aurizon, were heard before the Full Court of the Federal Court from 17 – 20 February 2020.