A proposed merger of Australia’s largest on-street parking providers has been called into question by the competition watchdog, emboldening industry critics who claim the deal – if approved – will lead to increased council rates and deteriorating services.
The Australian Competition and Consumer Commission (ACCC) is reviewing a proposal that would allow Orikan Group – a supplier of parking sensors, licence plate recognition technology and mobile payment parking meters, largely to local councils – to buy Duncan Technologies, which supplies parking meters and enforcement software to councils and car park operators.
A Duncan Technologies parking meter at Balmoral Beach, Mosman. Credit: Nick Moir
Orikan and Duncan, the country’s largest suppliers of on-street parking equipment, often compete for local government tenders. Rival companies estimate that between them the two hold at least 70 per cent of the parking payment and enforcement market, with a handful of smaller suppliers forming the rest of the national market.
The ACCC raised concerns over the proposed merger last week, three months after beginning a review of the deal, finding that other suppliers were “unlikely to provide a meaningful competitive constraint” to the proposed Orikan takeover, which could lead to the collapse of smaller services and reduced incentive to develop “best in breed” products.
“We are concerned that the proposed acquisition would substantially lessen competition in the market for end to end on-street parking solutions as Duncan is the primary competitor to Orikan,” ACCC commissioner Dr Philip Williams said.
Among rivals distressed by the proposal is Vehicle Monitoring Systems (VMS), which relies on Duncan to sell its primary product to the Australian market and argues that the merger would see this channel disappear overnight.
VMS managing director Saxon Hill also raised concerns that the merger could result in increased ratepayer fees if councils had to negotiate with a company strengthened by a commanding market share.
Saxon Hill is among those concerned about a proposed merger being reviewed by the ACCC.Credit: Nick Moir
“The entity that’s dominant in local tendering will be in a very strong position when setting prices,” Hill said. “By making councils pay more, it also affects consumers, because consumers are ratepayers.”
Darriea Turley, president of Local Government NSW – the councils’ peak body – was not approached by the ACCC to make a submission on the matter, but has also raised concern about what the merger might mean for consumers.
“LGNSW opposes any moves that would weaken competition in the marketplace and potentially increase costs for councils and their communities,” Turley said.
Orikan declined to comment on the proposed merger and Duncan did not respond to questions before publication. The ACCC is yet to rule out the merger, and is seeking additional industry opinion before making a final decision in March.
University of Sydney senior research associate Rob Nicholls, a specialist in competition law, said the merger “absolutely” raised concerns about a monopolised market. The ACCC would “want a lot of convincing” as to the consumer benefits attached to the deal.
“Persuading anybody that the public interest is served by a monopoly has to have some really countervailing public benefit, whereby the benefit is better than the damage caused by lessened competition.”
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