The NZ Commerce Commission is raising potential competition concerns around EROAD’s proposed acquisition of telematics company Coretex.
It has released a statement of issues outlining issues that may arise from the deal which will see EROAD acquire 100% of Coretex with an upfront payment of $157.7 million.
EROAD sought clearance from the Commission in relation to Coretex’s New Zealand business which represented 14% of Coretex Group’s FY21 units.
Coretex is a telematics vertical specialist delivering enterprise grade solutions with connected units in North America, Australia and New Zealand. It’s focused on growth verticals of less than a truck load (LTL), refrigerated transport, construction, and waste & recycling.
The acquisition is expected to accelerate EROAD’s key growth metrics by two years enabling it to capture significant growth opportunity in North America and Australia.
The deal will position EROAD to become a bigger player in the global telematics market which is estimated to grow to $750 billion by 2030.
The Commerce Commission says its “primary concern is assessing whether the proposed acquisition would substantially lessen competition due to horizontal unilateral effects for the supply of telematic solutions which include electronic road user charges (eRUC) systems”.
“We are also continuing to consider whether the proposed acquisition would substantially lessen competition due to coordinated effects through the allocation of customers,” it says.
The statement of issues outlines the potential competition issues with the acquisition and is not a final decision.
The Commission is seeking feedback from EROAD and Coretex and other interested parties on the issues raised with submissions due by November 1.
The Commission is scheduled to make a decision on the application by November 23 but this this date may be extended.
In a statement, EROAD says it “remains confident the acquisition will complete before the end of 2021”.
The acquisition, which received 100% shareholder approval on July 30, 2021, also remains conditional on Overseas Investment Office approval which is expected by the end of October 2021.
