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Forsyth Barr

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Tourism Holdings (THL) ComCom Statement of Issues</h2>
The Commerce Commission (ComCom) has issued a Statement of Issues (SoI) with regards to THL’s proposed acquisition of competitor, Apollo&nbsp;(<a href="http://atl.ax/" target="_blank" data-saferedirecturl="https://www.google.com/url?q=http://ATL.AX&amp;source=gmail&amp;ust=1647046071316000&amp;usg=AOvVaw1XR8yAEI-Fenieugb5IZAE" rel="noopener">ATL.AX</a>). The SoI outlines several concerns, requests further submissions on the&nbsp;proposed&nbsp;acquisition,&nbsp;and extends its decision timeframe to 14 April 2022.
ComCom’s concerns
The ComCom’s primary concern is the potential substantial lessening of competition “due to horizontal unilateral effects for the supply of motorhome [larger berth vehicles] rental services”. This means that the ComCom is concerned that with&nbsp;ATL&nbsp;removed from the market, a significant competitive constraint would be removed allowing the merged entity to increase prices.
It also appears to have concerns that there may be risk of the merged entity and its rivals co-ordinating&nbsp;their behaviour in the supply of motorhome rental services. This means that the ComCom is not yet satisfied that the merged entity wouldn’t be in a position to act as a market leader and tacitly coordinate prices among smaller market participants.
In contrast, the ComCom has no concerns over the supplier of campervan [smaller vehicles] rental services.
Our view
The ComCom has yet to make a final decision on the proposed acquisition but has outlined some reasonable concerns. The initial submission round yielded just two submissions from interested parties, in addition to one submitted by NERA on behalf of THL’s legal counsel. In the absence of a ComCom approval at this stage (the initial decision date was 1 March 2022),&nbsp;we believe&nbsp;it’d be prudent to view the chances of the proposed deal obtaining anti-trust sign off as being lower than when the deal was first announced, despite recognising that&nbsp;recent outcomes suggest the&nbsp;ComCom often takes a more negative view on competition issues in its preliminary or draft findings before taking a softer stance in its final decisions.
We continue to recognise that the deal&nbsp;if successful&nbsp;would add material value to THL.

Tourism Holdings (THL) ComCom Statement of Issues
The Commerce Commission (ComCom) has issued a Statement of Issues (SoI) with regards to THL’s proposed acquisition of competitor, Apollo&nbsp;(ATL.AX). The SoI outlines several concerns, requests further submissions on the&nbsp;proposed&nbsp;acquisition,&nbsp;and extends its decision timeframe to 14 April 2022.
ComCom’s concerns
The ComCom’s primary concern is the potential substantial lessening of competition “due to horizontal unilateral effects for the supply of motorhome [larger berth vehicles] rental services”. This means that the ComCom is concerned that with&nbsp;ATL&nbsp;removed from the market, a significant competitive constraint would be removed allowing the merged entity to increase prices.
It also appears to have concerns that there may be risk of the merged entity and its rivals co-ordinating&nbsp;their behaviour in the supply of motorhome rental services. This means that the ComCom is not yet satisfied that the merged entity wouldn’t be in a position to act as a market leader and tacitly coordinate prices among smaller market participants.
In contrast, the ComCom has no concerns over the supplier of campervan [smaller vehicles] rental services.
Our view
The ComCom has yet to make a final decision on the proposed acquisition but has outlined some reasonable concerns. The initial submission round yielded just two submissions from interested parties, in addition to one submitted by NERA on behalf of THL’s legal counsel. In the absence of a ComCom approval at this stage (the initial decision date was 1 March 2022),&nbsp;we believe&nbsp;it’d be prudent to view the chances of the proposed deal obtaining anti-trust sign off as being lower than when the deal was first announced, despite recognising that&nbsp;recent outcomes suggest the&nbsp;ComCom often takes a more negative view on competition issues in its preliminary or draft findings before taking a softer stance in its final decisions.
We continue to recognise that the deal&nbsp;if successful&nbsp;would add material value to THL.

Tourism Holdings (THL.NZ) - ComCom Statement of Issues for Apollo Deal