ACCC road block for AHG on Covs Parts sale


GPC Asia Pacific purchase deemed anti-competitive in narrow field

ACCC road block for AHG on Covs Parts sale
The proposed sale of Covs has been halted.

 

Automotive Holdings Group’s (AHG’s) proposed sale of vehicle parts subsidiary Covs Parts has hit an Australian Competition and Consumer Commission (ACCC) wall.

Following from a ‘statement of issues’ in October that raised competition concerns, given proposed buyer GPC Asia Pacific already owns Repco, the ACCC has refused to clear the deal.

"Repco and Covs Parts are the two largest generalist suppliers of automotive parts to trade customers in Western Australia and are each other’s closest competitor," ACCC chairman Rod Sims says.

"The removal of Covs Parts would likely result in a substantial lessening of competition."

GPC is a distributor and retailer of automotive parts and accessories to trade and retail customers in Australia and New Zealand, through its Repco and Ashdown-Ingram brands.

In Western Australia, GPC owns 36 Repco stores and eight Ashdown-Ingram branches.

Covs Parts operates a 25 branch network in Western Australia and supplies a broad range of automotive parts and accessories, primarily to trade customers.

GPC wants to acquire the company that owns and operates Covs Parts stores across 16 locations in the greater metropolitan Perth region, and in the regional towns of Albany, Bunbury, Busselton, Esperance, Geraldton, Kalgoorlie, Karratha, Mandurah and Port Hedland.

The ACCC notes it made inquiries with a range of interested parties, including trade customers, specialist automotive parts suppliers, dealerships and retail-focused automotive parts suppliers in Perth and each of the regional towns.

Market inquiries indicated that trade customers are heavily reliant on GPC and Covs for their supply of automotive parts, particularly in regional towns, with limited other local options.

"Trade customers such as mechanic workshops have raised concerns that the proposed acquisition would result in GPC acquiring its closest competitor," Sims says.

"In particular, the ACCC has received market feedback about the potential for the combined GPC/Covs Parts business to raise the trade prices of automotive parts."

The ACCC intends to issue a public competition assessment in due course.

AHG is formulating a response, a spokesman says.

 

 

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