“The ACCC sought information and views from a range of interested parties including online retailers and suppliers of express services. Customers did not raise significant competition concerns with the ACCC. Based on market inquiries and information provided by the merger parties, the ACCC determined that the proposed acquisition is unlikely to result in increased prices or reduced service levels.
“The merged entity will continue to face significant competition, including from other international rivals with significant global delivery infrastructure and networks. The merged entity will also face a credible threat of new entry and expansion by rivals. Customers of express services face low costs to switch suppliers. If the merged entity attempted to increase prices, most customers indicated they could move to other suppliers, most notably DHL or UPS.”
The ACCC consulted other international competition regulators in the course of its review, including the European Commission, whose review is ongoing, and the New Zealand Commerce Commission, which recently approved the proposed acquisition.
The ACCC concluded that the proposed acquisition was unlikely to substantially lessen competition in the market for express services. The deal would reduce the number of key suppliers of express services from 4 to 3 however, the merged entity would continue to face strong competition from the remaining integrators, DHL and UPS, and the credible threat of new entry and expansion by other suppliers of express services.
The ACCC also concluded that the proposed acquisition was unlikely to increase the ability and incentive for the merged entity and the remaining integrators to engage in price coordination, or coordination based on customer allocation or geographic market sharing. Relevant factors in this regard included the lack of price transparency in the market, the network of subcontractors engaged by suppliers, and the highly fragmented and differentiated nature of customer demand. These factors would make coordination difficult to implement.
FedEx provides small package delivery and freight services through an integrated global network. In Australia, FedEx supplies express services for small packages and freight to approximately 220 countries worldwide. TNT is an international delivery services company. In Australia (in fact the land of its post war birth as Thomas Nationwide Transport) TNT supplies both domestic and international small package delivery services, and domestic and international freight services.
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