Back in February, Navteq reported that Rheem Australia was set to take over Aqua-Max in a deal worth approximately $40 million. The deal has now been approved by the ACCC after it found it is unlikely to lessen competition in the water heater market.
The ACCC has just issued a statement that it will not oppose the proposed acquisition of the Aqua-Max water heater business from Sietel Ltd, by Rheem Australia Pty Ltd. This comes four months after the deal was first mentioned on 24 February 2009.
The reason for the lengthy delay is that the ACCC had to investigate extensive market enquiries with the merger parties, customers, competitors, importers, representative bodies, State and Federal government departments and other relevant market participants.
The ACCC also had to examine government regulations in the water heating industry and the potential impact this will have on the market in the future.
The ACCC issued the following statement: “Information provided to the investigation indicated that Rheem, Dux and Aqua-Max are the three most significant national suppliers of electric and gas storage water heaters. They are each others’ closest competitors for the supply of these products. Aqua-Max was identified as a vigorous and effective competitor in an industry where there are significant barriers to entry or expansion”.
But after a thorough investigation the ACCC found that it would be unlikely to result in a substantial lessening of competition, due to the fact that a large amount of consumers are currently switching from gas storage water heaters to alternatives like instantaneous gas, solar and heat pump water heaters.