TechPac takeover under investigation

TechPac takeover under investigation

The acquisition by Tech Pacific Pty Ltd of Merisel Pty Ltd is being investigated by the Australian Competition and Consumer Commission.

In a letter sent out to resellers, the ACCC advises that enquiries are being conducted into the acquisition pursuant to section 50 of the Trade Practices Act "which prohibits mergers and acquisitions which have the effect, or are likely to have the effect, of substantially lessening competition".

It remains to be seen whether the acquisition constitutes such a breach.

According to the ACCC letter, the area of concern is the effect the acquisition may have on the market for the wholesale supply of computer hardware and software products.

The letter indicates that Tech Pacific has already made a submission to the ACCC, stating "that manufacturers of computer products are in a position to supply directly to retailers of these products, that there are few exclusive supply arrangements in the industry and that the barriers to new entrants to computer products wholesaling are low". Tech Pacific contends that the presence of these factors means the acquisition will not substantially lessen competition.

An ACCC spokesperson said the Trade Practices Act requires the Commission to investigate mergers and acquisitions, and hence it is simply collecting information to make that evaluation. She said it will be a matter of weeks before any decision is reached.

Should the acquisition be found to constitute a breach of the Act, a number of remedies are available, said the spokesperson. "If we feel that there is a breach, and I'm not saying there is, we shall suggest they withdraw the merger proposal. In extreme cases we can request a divestiture, but that's very rare." Such a remedy may prove impracticable though, given that many of the original Merisel staff have left the merged company.

Tech Pacific managing director, David Cullen, said he is unconcerned by the investigation, with Tech Pacific having known one would be required at the time of the acquisition. "It's a standard investigation the ACCC takes out when this sort of acquisition takes place. We don't believe there are any issues there at the end of the day. From what we're told it's a standard process."

Submissions to the ACCC closed on July 8, but the ACCC may continue to accept further submissions by mail to its offices in all capital cities.

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