The ACCC has announced that it will not oppose Ventia’s proposed acquisition of Broadspectrum. Ventia is a 50/50 partnership between CIMIC Group Limited (ASX:CIM) and funds management firm Apollo Global Management, LLC.

Ventia and Broadspectrum are both providers of infrastructure services. The ACCC’s review focused on three types of infrastructure services: design and construction, operation and maintenance and facilities management.

The companies provide services to a wide range of industries, including industries that provide critical services to consumers such as electricity, telecommunications and water.

“We looked at this proposed acquisition closely to ensure strong competition remains in the supply of infrastructure services to industries with a direct impact on consumer prices,” ACCC Commissioner Stephen Ridgeway said.

“We contacted many customers of infrastructure services, and received consistent feedback that there is sufficient competition from alternative suppliers and that companies will continue to have a variety of options when contracting for infrastructure services.”

“Ventia and Broadspectrum generally offer differentiated services with minimal overlap in a number of industries including defence, justice, education, social housing, oil and gas, environmental consulting and real estate,” Mr Ridgeway said.

We are conscious of the impact of the COVID-19 pandemic on many businesses and transactions and, where possible, we will expedite reviews as we have done in this review.

Further information is available at Ventia Services Group Pty Ltd - Ferrovial Services Australia Pty Ltd (Broadspectrum).

Background

Ventia is a 50/50 partnership between CIMIC Group Limited and funds management firm Apollo Global Management, LLC. Ventia provides infrastructure services throughout a range of industries, including social infrastructure, transport and utilities. Ventia also supplies services for telecommunication infrastructure assets through its Visionstream subsidiary.

Broadspectrum provides infrastructure services across a range of industries, including defence, urban and social infrastructure, natural resources, transport, telecommunications and real estate. It also provides integrated property and facilities management services to 37 different Australian Government entities, including the ACCC.

Broadspectrum operates in its own name and through its subsidiary brands, including APP Corporation and Easternwell Group.

Design and construction services involve the planning, design and construction of capital assets. These services are inputs into the overall project delivery method used to take the project design from conception to construction, and handover to the customer.

Operation and maintenance services relate to existing infrastructure and include a combination of ongoing asset maintenance and repair, operational support and asset replacement.

Facilities management services relate to the maintenance of physical assets and their support processes.

The Federal Court has ordered that STA Travel Pty Ltd (STA Travel) pay $14 million in penalties for making false or misleading claims when advertising its MultiFLEX Pass product.

STA Travel admitted that, between March 2014 and August 2019, it made misleading representations in MultiFLEX Pass advertising that consumers who bought the airfare add-on could change their flights without paying fees or charges.

“Consumers were misled into purchasing the MultiFLEX Pass on the representation that they would not have to pay anything further for date changes to their flights, when, in fact, STA often charged consumers hundreds of dollars for changing their flights” ACCC Commissioner Sarah Court said.

In many cases, STA Travel’s charges were not reflective of additional fees imposed by the airline. For example, in almost a quarter of cases where a customer was charged extra by STA Travel, the amount was more than double the additional airfare and tax imposed by the airline.

“In 12 per cent of cases, STA Travel charged MultiFLEX Pass customers to make a change to a flight although the airline itself had not charged STA Travel anything at all for the change,” Ms Court said.

“These penalties serve as a timely reminder to all travel businesses that they must not misrepresent the costs applicable when travel services are changed.”

The MultiFLEX Pass cost up to $149 to purchase upfront. Between 2015 and 2019, STA Travel estimates it sold on average approximately 16,000 MultiFLEX Passes per year.

STA Travel admitted liability and made joint submissions with the ACCC to the Federal Court. STA Travel will also contribute to the ACCC’s legal costs.

Notes to Editors

The ACCC initiated proceedings against STA Travel in March 2019 and the proceedings are unrelated to any COVID-19 issues.

Due to the COVID-19 pandemic, the ACCC is assessing the impacts on consumers and working with the travel industry more broadly. Given the circumstances, the ACCC is urging all businesses to treat customers fairly in these exceptional times.

More information on consumer rights during the COVID-19 pandemic can be found here: COVID-19 (coronavirus) information for consumers.

Background:

STA Travel is a national supplier of travel and tourism services. Its advertising targets students and young people and emphasises discounts and flexibility.

STA Travel promoted the MultiFLEX Pass via multiple channels including its website, brochures/flyers, in store posters, a YouTube video and in-store LCD screen displays.

STA Travel sold a range of MultiFLEX Passes to consumers, namely:

• the ONEFlex Pass, costing $49 and allowing one flight date change;
• the ‘3 Change Pass’ or ‘Multiflex Pass’, costing $99 and allowing three flight date changes; and
• the ‘Unlimited’ or ‘Ultimate’ change pass, costing $149 and allowing unlimited flight date changes.

An example of one of STA Travel’s misleading advertisements is below:

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.

Nearly 200,000 vehicles fitted with potentially deadly airbags are still on the roads, and more than 8,000 of these are considered so dangerous they should not be driven at all, according to the latest ACCC figures on the compulsory recall of Takata airbags.

In addition, a significant number of vehicles fitted with a different type of faulty Takata airbag are yet to be remedied. These vehicles, which are fitted with Takata NADI airbags, are considered so dangerous that manufacturers are offering to buy back the vehicles or to provide a loan vehicle until replacement parts are available. We are aware that there have been two deaths and two injuries in Australia resulting from misdeployments of Takata NADI airbags. 

Motorists are being urged to check now if their vehicles are fitted with these recalled Takata airbags, as car dealerships are still operating and providing replacement airbags free of charge. 

“Even during this pandemic, replacing faulty airbags is an essential and potentially life-saving task, especially as vehicles may be being used by essential workers and care-givers,” ACCC Deputy Chair Delia Rickard said.

“It will also be more important than ever that as more people start to use their cars again, they check that their airbags are safe. Affected Takata airbags can misdeploy and send sharp metal fragments into the vehicle at high speed, and cause serious injury or death to its occupants.”

“Drivers should check online or with their dealer or manufacturer whether their vehicles are subject to this compulsory recall or the voluntary recall of Takata NADI airbags, and never ignore a notice of recall from your car’s manufacturer,” Ms Rickard said.

Globally there have been 29 deaths and over 320 serious injuries reported, including one death and one serious injury in Australia relating to airbags affected by the compulsory recall.

Over four million airbags in more than three million vehicles in Australia were originally affected by the Takata compulsory recall due to these potentially deadly airbags.

More than 88 per cent of airbags have now been rectified, and about six per cent have been reported by suppliers as written-off, stolen, unregistered, exported or modified and unable to be replaced.

Figures from the ACCC’s latest quarterly update on the compulsory recall show that about five per cent (over 228,000) of faulty airbags remain in more than 196,000 vehicles.

In particular, motorists are in danger if they have a critical vehicle containing an airbag that poses a heightened risk of causing injury or death. There still more than 8,000 of these vehicles remaining on the roads, and drivers can check the Product Safety Australia website if their vehicle is affected.

“Vehicles with critical airbags should not be driven. Please contact your dealer to arrange for your vehicle to be towed to the place of repair free of charge so you do not have to drive it,” Ms Rickard said.

The ACCC is also conscious of the impact COVID-19 is having on Australian consumers and businesses.

“We understand dealerships are still operating and are offering the services outlined in the compulsory and voluntary recall notices. Both the ACCC and the Department of Infrastructure, Transport, Regional Development and Communications will be closely monitoring any changes to these arrangements,” Ms Rickard said.

Consumers can also search for vehicles affected by the Takata compulsory recall by entering their number plate and state or territory at: IsMyAirbagSafe.com.au or by texting 'Takata' to 0487 AIRBAG (247224).

A list of vehicle manufacturer helplines and contact details is available at: Vehicle manufacturer helplines & contact details.

Takata fast facts

• In total about 3.62 million airbag inflators (88.1%) have now been rectified in about 2.64 million vehicles.
• This excludes 259,025 airbag inflators (6.3%) in 216,138 vehicles reported by suppliers as unrepairable (written off, scrapped, stolen, or modified and unable to have the airbag replaced). 
• There remains 228,764 airbag inflators (5.6%) in 196,299 vehicles outstanding for replacement.
• As at 31 March 2020, there are 1,895 vehicles with critical-alpha airbags and 6,471 vehicles with critical non-alpha airbags outstanding for replacement.
• Vehicles with critical airbags should not be driven, and drivers are entitled to have their vehicles towed to the dealership to have the airbag replaced for free. 

Notes to editors:

• The Takata airbag recall is the world’s largest automotive recall, affecting an estimated 100 million vehicles globally.
• It is the most significant compulsory recall in Australia’s history, with over four million affected Takata airbag inflators and involving more than three million vehicle recalls.
• Takata airbags affected by the compulsory recall use a chemical called phase-stabilised ammonium nitrate (PSAN). The ACCC’s investigation concluded that certain types of Takata PSAN airbags have a design defect. The defect may cause the airbag to deploy with too much explosive force so that sharp metal fragments shoot out and hit vehicle occupants, potentially injuring or killing them.
• In addition to the compulsory recall of vehicles fitted with Takata PSAN airbags, eight vehicle manufacturers have also issued voluntary recalls for some vehicles manufactured between 1996 and 2000, which may have been fitted with a different type of faulty Takata airbag, being a NADI airbag.

The COVID-19 pandemic is dramatically changing the global economic landscape and causing severe disruption to Australian small businesses, ACCC Chair Rod Sims said today.

“Many small businesses are doing it tough, and are being forced to restrict their hours, lay off staff and, for too many, close their doors,” Mr Sims said.

Mr Sims was speaking via Zoom at an event organised by the Australian Chamber of Commerce and Industry (ACCI).

“We know the COVID-19 pandemic is having a significant economic impact across Australia, which is why we are taking measures to help consumers and small to medium sized businesses,” Mr Sims said.

Mr Sims said the ACCC’s immediate response to the pandemic has focused in two broad areas of work:

• authorisation of crisis collaboration between competitors, particularly in relation to hardship polices, and
• the establishment of the ACCC’s COVID-19 Taskforce to tackle immediate harmful consumer and small business problems arising from the crisis.

Mr Sims said the ACCC has already granted interim authorisation allowing retailers to collectively bargain with landlords about rent relief during the pandemic.

“We see a clear public benefit in allowing retailers to work together in negotiations with landlords and help tenants who are experiencing financial hardship,” Mr Sims said.

Mr Sims said a conditional authorisation had also been granted to allow the Australian Energy Council and wholesale and retail energy businesses to provide financial relief to business customers financially impacted by the current crisis.

“Energy is an essential service and it is important energy market participants support businesses through the pandemic,” Mr Sims said.

Mr Sims said there may be further benefits to energy users flowing from the crisis.

“One rare positive to come from this pandemic is that wholesale electricity and gas prices are falling significantly. These falls need to be passed on to businesses that rely on energy,” Mr Sims said.

“As Australia comes out of this crisis we will need our energy prices to fall significantly if we are to have the recovery we need.”

Mr Sims said the ACCC’s COVID-19 Taskforce is rapidly responding to the thousands of phone calls, emails and social media reports from impacted businesses.

“We are already engaging with some large businesses about allegations they are deliberately choosing not to pay their suppliers, or demanding large discounts off goods already delivered, and also delaying payments significantly, and that they should cease the conduct immediately,” Mr Sims said.

“We are looking into concerns that many small grocery or convenience stores are missing out on supplies that now seem readily available to the large supermarkets. We need to maintain strong competition in the retail sector to ensure economic recovery once the pandemic subsides.”