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AW Tyree Transformers Pty Ltd and Wilson Transformers Co P/L

(1997) ATPR (Com)

 

Facts

The applicants sought authorisation of a joint marketing agreement which they claimed was a competitive response to changes in electricity supply industry

  • AW Tyree supplied distribution transformers
  • Wilson produced power transformers and specialised distribution transformers
  • There are four ranges of distribution transformers
  • Tyree produces mainly sub 100 kVA products
  • Wilson produces mainly above 100 kVA products
  • Changes to industry were forcing electricity utilities to implement cost reduction strategies

The joint marketing agreement was entered into so parties could jointly tender to utility customers – the agreement set out when joint bids could be made:

  • If tender indicates preference for single supplier
  • If utility expresses positive interest in joint bid

When no joint bid, the companies would operate separately.  Authorisation was sought.

 

Held (ACCC)

  • Noted the applicants currently compete in respect of only a limited range. The joint venture will predominantly affect range B transformers and is limited to where range B is linked to range A or range C and where tender indicates it will assess tenders on preference for single supplier. Where a tender is for range B only, A’s will compete
  • The JV has no significant anti-competitive effect because of (1) the number and size of existing competitors that would provide the parties with significant competition; (2) the threat of imports due to falling tariffs; (2) the countervailing power of utilities and (4) evidence that demand is falling
  • In fact, the JV is pro-competitive because it provides an additional market participant able to singularly provide full range of transformers … where this is demanded