k ng&wgod mallesons · construction services in metropolitan perth. public detriments (a)...
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K NG&WGODMALLESONS
iio OCT m
Level 61Governor Phillip Tower1 Farrer Place
Sydney NSW 2000Australia
T +61 2 9296 2000F +61 2 9296 3999
www.kwm.com
8 October 2014
FILE No;
DOC-
MARS/PRISM:Dr Richard ChadwickGeneral ManagerAdjudication BranchAustralian Competition and Consumer Commission23 Marcus Clarke StreetCANBERRA ACT [email protected]
Dear Dr Chadwick
Notification of Exclusive Dealing - Australand Industrial No. 88 Pty Ltd
We act for Australand Industrial No. 88 Pty Ltd ACN 107 355 706 and Bonvest Pty Ltd ACN 009 087 343(the "Companies"), being co-owners as tenants in common of land comprising the Baldivis Parksdevelopment.
We enclose two Notifications of Exclusive Dealing, one for each of the Companies, pursuant to section 93(1)of the Competition and Consumer Act 2010 (the "Act") (the "Notifications").
The Notifications are lodged in respect of conduct that may constitute third line forcing as defined by sections47(6) and 47(7) of the Act.
In brief, the Companies propose to:
1 supply or offer to supply certain residential lots in their Baldivis Parks development to consumers oncondition that the consumers enter into building construction contracts with one of four nominatedbuilders for the construction of buildings on those lots; and
2 not supply certain residential lots in their Baldivis Parks development to consumers unless theconsumers have entered, or have agreed to enter, into building construction contracts with one offour nominated builders for the construction of buildings on those lots.
The proposed conduct will benefit the public, including by ensuring the quality of construction on the relevantlots and ensuring efficiency and reduced costs in the purchase of lots and construction of dwellings.
The Companies believe that the proposed conduct will not result in any public detriments, as the relevantmarkets are highly competitive, the relevant residential lots comprise a small portion of those markets, andconsumers face a number of alternative purchasing options, including other residential lots in Baldivis andother parts of metropolitan Perth.
&4±8s i«iffiM«iSafimBT. e^Stfl, SiBttSIH www.kwm.comS* I Bt» I dblS I .t'^Member firm of the King & Wood Mallesons network. See www.kwm.com for more informationAsia Pacific | Europe | North America | Middle East
11991741_2 / 60-8000-0577
KING&WGODMALLESONS
Adjudication BranchAustralian Competition and Consumer Commission 8 October 2014
We also enclose a cheque made payable to the Australian Competition and Consumer Commission in thesum of $200, being the prescribed lodgmentfee for the Notifications.
Please let us know if you wish to discuss the Notifications or require any additional information.
Thank you for your assistance.
rs sincerely
S^dron HenrickPartner and Head of Competition Law & Regulatory AustraliaTj+61 2 9296 2294Ml+61 438 323 [email protected]
^
11991741 2 Page 2
Form GCommonwealth of Australia
Competition and Consumer Act 2010 - subsection 93(1)NOTIFICATION OF EXCLUSIVE DEALING
To the Australian Competition and Consumer Commission:
Notice is hereby given, in accordance with subsection 93 (1) of the Competition and Consumer Act2010, of particulars of conduct or of proposed conduct of a kind referred to subsections 47 (2), (3), (4),(5), (6),(7), (8) or (9) of that Act in which the person giving notice engages or proposes to engage.
PLEASE FOLLOW DIRECTIONS ON BACK OF THIS FORM
1 Applicant
(a) Name of person giving notice:(Refer to direction 2)
Australand Industrial No. 88 Pty Ltd ACN 167 317 204 ("Australand").
(b) Short description of business carried on by that person:(Refer to direction 3)
Australand is an Australian proprietary company engaged in the business ofsubdividing and selling residential lots of land as well as providing related propertymanagement services.
Australand is a wholly owned subsidiary ofAustraland Holdings Ltd ACN 008 443696, which is one of Australia's leading diversified property groups with propertyinvestment, development and management operations spanning the residential,commercial and industrial sectors across Australia.
(c) Address in Australia for service of documents on that person:
Andrew Graham
Sales and Marketing DirectorAustraland Property GroupLevel 2, 115 Cambridge StreetWEST LEEDERVILLE WA 6007
Telephone:Email:
Notified arrangement
(a)
(b)
Description of the goods or services in relation to the supply or acquisition of whichthis notice relates:
House and land packages at 'Baldivis Parks', a master planned community located inthe suburb ofBaldivis, which is approximately 46 kilometres south of the centralbusiness district of Perth, Western Australia.
Description of the conduct or proposed conduct:(Refer to direction 4)
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Together with Bonvest Pty Ltd ACN 009 087 343 ("Bonvest"), Australand is a co-owner as tenant in common of land comprising the Baldivis Parks development.
This land is to be developed over approximately 17 stages and will consist ofapproximately 1000 residential lots, as well as associated infrastructure andcommunal areas.
The land subject to this notification is related to Stages 1 and 8 of the developmentand comprises approximately 28 residential lots, which will be set aside for sale ashouse and land packages, including but not limited to common driveways, landscapedareas and letterbox facilities ("Site").
Specifically, Australand and Bonvest may:
. supply or offer to supply residential lots at the Site to consumers on conditionthat the consumers enter into building construction contracts with buildersnominated by Australand and Bonvest; and
. decline to supply residential lots at the Site to consumers who have notagreed to enter, and will not enter, into building construction contracts withbuilders nominated by Australand and Bonvest.
The lots will be divided into sections ("Sections"), and each Section will be allocatedto one of the four following builders selected by Australand and Bonvest, neither ofwhich is a related body corporate ofAustraland or Bonvest:
. Homebuyers Centre Pty Ltd ACN 051 346 59 1
. Content Living Pty Ltd ACN 055 245 308
HALPD Pty Ltd ACN 106 561 924
Ventura Home Group Pty Ltd ACN 093 870 618
A consumer proposing to purchase a residential lot within a Section allocated to aparticular nominated builder would be required to enter into a contract with thatnominated builder for the construction of a building on that residential lot.
Australand and Bonvest propose to sell the remaining lots beyond the Site at BaldivisParks (i.e., those that will not be subject to conditions requiring purchasers to retainthe services of nominated builders) as vacant land.
Persons, or classes of persons, affected or likely to be affected by the notified conduct
(a) Class or classes of persons to which the conduct relates:(Refer to direction 5)
Potential and actual purchasers of residential lots in the Site.
(b) Number of those persons:
(i) At present time:
Nil.
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fii) Estimated within the next year:(Refer to direction 6)
21-56
(c) Where number of persons stated in item 3 (b) (i) is less than 50, their names andaddresses:
Not applicable. There are no prospective purchasers of the home and land packages atthis time.
Public benefit claims
(a) Arguments in support of notification:(Refer to direction 7)
Australand and Bonvest have engaged in a rigorous process to choose the fournominated builders referred to in section 2(b) above with the aim of ensuring that thebuilders possessed the necessary capabilities and capacity to construct high qualityhouses at affordable prices and to do so in compliance with Baldivis Parks' designguidelines and building requirements.
The notified conduct will result in the following public benefits:
1. The allocation of each Section to a single builder, together with Baldivis Parks'design guidelines and building requirements, will ensure consistency, quality andintegrity with respect to design, appearance and streetscape. This will in turnpromote confidence in buyers as to:
a. the desirability of the neighbourhood environment;
b. the design quality of homes; and
c. the quality of their investments.
2. The selection of specific design outcomes by Australand and Bonvest willenhance the capital value of the property for the buyer and of the surroundingproperties of other buyers.
3. Supplying the house and land as a packaged bundle is the most efficient methodto deliver affordable housing outcomes as the majority of the lots will be sold tofirst home owners.
4. The allocation of Sections to nominated builders will:
a. ensure quality control and promote safety at construction Sites;
b. result in additional efficiencies during construction; and
c. reduce the risk of disputes regarding compliance with design guidelinesand building requirements.
5. Economies of scale and cost benefits that can be passed on to buyers of the lots,including with respect to:
11986291_6
a. construction services being supplied at scale across entire Sections of theSite, with resultant efficiencies arising in part from the pre-design ofhomes and enhanced coordination among constmction activitiesperformed simultaneously across multiple, small lots around which thereis limited space for the storage of machinery and materials;
b. tradesmen performing electrical, plumbing, carpentry and fit out serviceseach being able to supply their services for an entire Site as one job,rather than needing to treat each dwelling as a separate job; and
c. the sale of lots to ultimate buyers rather than initially to the nominatedbuilders and then to the ultimate buyer would mean that the ultimatebuyer need not pay duty on two transactions.
6. There was competition for the construction of houses when Australand andBonvest sought to engage builders to design and build dwellings at the Site.
7. Allowing buyers to purchase vacant lots 'off the plan' prior to the commencementof construction thereon allows buyers to pay lower amounts of stamp duty (basedon the lower valuations of vacant lots relative to those of lots with dwellings builtupon them).
(b) Facts and evidence relied upon in support of these claims:
Please see section 4(a) above.
Market definition
Provide a description of the market(s) in which the goods or services described at 2 (a) aresupplied or acquired and other affected markets including: significant suppliers and acquirers;substitutes available for the relevant goods or services; any restriction on the supply oracquisition of the relevant goods or services (for example geographic or legal restrictions):(Refer to direction 8)
The markets for the supply and acquisition of real estate that is zoned, or capable ofbeing zoned, as residential and for the supply and acquisition of residentialconstruction services in metropolitan Perth.
Public detriments
(a) Detriments to the public resulting or likely to result from the notification, in particularthe likely effect of the notified conduct on the prices of the goods or servicesdescribed at 2 (a) above and the prices of goods or services in other affected markets:(Refer to direction 9)
Australand believes that the notified conduct involves no public detriments.
(b) Facts and evidence relevant to these detriments:
1. The markets identified above are highly competitive and involve significantnumbers of competitors operating within them, including numerous competingresidential developments available throughout metropolitan Perth.
2. The Site represents a small portion of the markets identified in section 5 above.
3. Buyers who do not wish to contract with the nominated builders may
11986291_6
a. wait until the release of a later stage of the Baldivis Parks development,in respect of which the restriction to enter into a contract with anominated builder will not apply;
b. purchase an existing lot in the Baldivis Parks development in respect ofwhich there is no restriction to enter into a contract with a nominatedbuilder;
c. purchase land or a house at another site (including other sites in Baldivisand other parts of metropolitan Perth).
Further information
(a) Name, postal address and contact telephone details of the person authorised toprovide additional information in relation to this notification:
Andrew Graham
Sales and Marketing DirectorAustraland Property GroupLevel 2, 115 Cambridge StreetWEST LEEDERVILLE WA 6007
Telephone: +61892147952Email: [email protected]
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11993857_4
DIRECTIONS
1. In lodging this form, applicants must include all information, including supportingevidence that they wish the Commission to take into account in assessing theirnotification.
Where there is insufficient space on this form to furnish the required information, theinformation is to be shown on separate sheets, numbered consecutively and signed byor on behalf of the applicant.
2. If the notice is given by or on behalf of a corporation, the name of the corporation isto be inserted in item 1 (a), not the name of the person signing the notice, and thenotice is to be signed by a person authorised by the corporation to do so.
3. Describe that part of the business of the person giving the notice in the course of thewhich the conduct is engaged in.
4. If particulars of a condition or of a reason of the type referred to in section 47 of theCompetition and Consumer Act 2010 have been reduced in whole or in part towriting, a copy of the writing is to be provided with the notice.
5. Describe the business or consumers likely to be affected by the conduct.
6. State an estimate of the highest number of persons with whom the entity giving thenotice is likely to deal in the course of engaging in the conduct at any time during thenext year.
7. Provide details of those public benefits claimed to result or to be likely to result fromthe proposed conduct including quantification of those benefits where possible.
8. Provide details of the market(s) likely to be affected by the notified conduct, inparticular having regard to goods or services that may be substitutes for the good orservice that is the subject matter of the notification.
9. Provide details of the detriments to the public which may result j&om the proposedconduct including quantification of those detriments where possible.
11993857_4
Form GCommonwealth of Australia
Competition and Consumer Act 2010 - subsection 93(1)NOTIFICATION OF EXCLUSIVE DEALING
To the Australian Competition and Consumer Commission:
Notice is hereby given, in accordance with subsection 93 (1) of the Competition and Consumer Act2010, of particulars of conduct or of proposed conduct of a kind referred to subsections 47 (2), (3),(4),(5), (6),(7), (8) or (9) of that Act in which the person giving notice engages or proposes to engage.
PLEASE FOLLOW DIRECTIONS ON BACK OF THIS FORM
1 Applicant
(a) Name of person giving notice:(Refer to direction 2)
Bonvest Pty Ltd ACN 009 087 343 ("Bonvest").
(b) Short description of business carried on by that person:(Refer to direction 3)
Bonvest is an Australian proprietary company holding a 50% interest in land to besubdivided in Baldivis, Western Australia.
(c) Address in Australia for service of documents on that person:
Andrew Graham
Sales and Marketing DirectorAustraland Property GroupLevel 2, 115 Cambridge StreetWEST LEEDERVILLE WA 6007
Telephone:Email:
Notified arrangement
(a)
(b)
Description of the goods or services in relation to the supply or acquisition of whichthis notice relates:
House and land packages at 'Baldivis Parks', a master planned community located inthe suburb ofBaldivis, which is approximately 46 kilometres south of the centralbusiness district of Perth, Western Australia.
Description of the conduct or proposed conduct:(Refer to direction 4)
Together with Australand Industrial No. 88 Pty Ltd (ACN 167 317 204)("Australand"), Bonvest is a co-owner as tenant in common of land comprising theBaldivis Parks development.
11993857 4
This land is to be developed over approximately 17 stages and will consist ofapproximately 1000 residential lots, as well as associated infrastructure andcommunal areas.
The land subject to this notification is related to Stages 1 and 8 of the developmentand comprises approximately 28 residential lots, which will be set aside for sale ashouse and land packages, including but not limited to common driveways, landscapedareas and letterbox facilities ("Site").
Specifically, Australand and Bonvest may:
. supply or offer to supply residential lots at the Site to consumers on conditionthat the consumers enter into building construction contracts with buildersnominated by Australand and Bonvest; and
. decline to supply residential lots at the Site to consumers who have notagreed to enter, and will not enter, into building construction contracts withbuilders nominated by Australand and Bonvest.
The lots will be divided into sections ("Sections"), and each Section will be allocatedto one of the four following builders selected by Australand and Bonvest, neither ofwhich is a related body corporate ofAustraland or Bonvest:
. Homebuyers Centre Pty Ltd ACN 051 346 59 1
. Content Living Pty Ltd ACN 055 245 308
. HALPD Pty Ltd ACN 106 561 924
. Ventura Home Group Pty Ltd ACN 093 870 618
A consumer proposing to purchase a residential lot within a Section allocated to aparticular nominated builder would be required to enter into a contract with thatnominated builder for the construction of a building on that residential lot.
Australand and Bonvest propose to sell the remaining lots beyond the Site at BaldivisParks (i.e., those that will not be subject to conditions requiring purchasers to retainthe services of nominated builders) as vacant land.
Persons, or classes of persons, affected or likely to be affected by the notified conduct
(a) Class or classes of persons to which the conduct relates:(Refer to direction 5)
Potential and actual purchasers of residential lots in the Site.
(b) Number of those persons:
(i) At present time:
Nil.
fii) Estimated within the next year-(Refer to direction 6)
U993857_4
21-56
(c) Where number of persons stated in item 3 (b) (i) is less than 50, their names andaddresses:
Not applicable. There are no prospective purchasers of the home and land packages atthis time.
Public benefit claims
(a) Arguments in support of notification:(Refer to direction 7)
Australand and Bonvest have engaged in a rigorous process to choose the fournominated builders referred to in section 2(b) above with the aim of ensuring that thebuilders possessed the necessary capabilities and capacity to construct high qualityhouses at affordable prices and to do so in compliance with Baldivis Parks' designguidelines and building requirements.
The notified conduct will result in the following public benefits:
1. The allocation of each Section to a single builder, together with Baldivis Parks'design guidelines and building requirements, will ensure consistency, quality andintegrity with respect to design, appearance and streetscape. This will in turnpromote confidence in buyers as to:
a. the desirability of the neighbourhood environment;
b. the design quality of homes; and
c. the quality of their investments.
2. The selection of specific design outcomes by Australand and Bonvest willenhance the capital value of the property for the buyer and of the surroundingproperties of other buyers.
3. Supplying the house and land as a packaged bundle is the most efficient methodto deliver affordable housing outcomes as the majority of the lots will be sold tofirst home owners.
4. The allocation of Sections to nominated builders will:
a. ensure quality control and promote safety at construction Sites;
b. result in additional efficiencies during construction; and
c. reduce the risk of disputes regarding compliance with design guidelinesand building requirements.
5. Economies of scale and cost benefits that can be passed on to buyers of the lots,including with respect to:
a. constmction services being supplied at scale across entire Sections of theSite, with resultant efficiencies arising in part from the pre-design ofhomes and enhanced coordination among constmction activities
11993857_4
performed simultaneously across multiple, small lots around which thereis limited space for the storage of machinery and materials;
b. tradesmen performing electrical, plumbing, carpentry and fit out serviceseach being able to supply their services for an entire Site as one job,rather than needing to treat each dwelling as a separate job; and
c. the sale of lots to ultimate buyers rather than initially to the nominatedbuilders and then to the ultimate buyer would mean that the ultimatebuyer need not pay duty on two transactions.
6. There was competition for the construction of houses when Australand andBonvest sought to engage builders to design and build dwellings at the Site.
7. Allowing buyers to purchase vacant lots 'off the plan' prior to the commencementof construction thereon allows buyers to pay lower amounts of stamp duty (basedon the lower valuations of vacant lots relative to those of lots with dwellings builtupon them).
(b) Facts and evidence relied upon in support of these claims:
Please see section 4(a) above.
Market definition
Provide a description of the market(s) in which the goods or services described at 2 (a) aresupplied or acquired and other affected markets including: significant suppliers and acquirers;substitutes available for the relevant goods or services; any restriction on the supply oracquisition of the relevant goods or services (for example geographic or legal restrictions):(Refer to direction 8)
The markets for the supply and acquisition of real estate that is zoned, or capable ofbeing zoned, as residential and for the supply and acquisition of residentialconstruction services in metropolitan Perth.
Public detriments
(a) Detriments to the public resulting or likely to result from the notification, in particularthe likely efFect of the notified conduct on the prices of the goods or servicesdescribed at 2 (a) above and the prices of goods or services in other affected markets:(Refer to direction 9)
Australand believes that the notified conduct involves no public detriments.
(b) Facts and evidence relevant to these detriments:
1. The markets identified above are highly competitive and involve significantnumbers of competitors operating within them, including numerous competingresidential developments available throughout metropolitan Perth.
2. The Site represents a small portion of the markets identified in section 5 above.
3. Buyers who do not wish to contract with the nominated builders may:
I1993857_4
a. wait until the release of a later stage of the Baldivis Parks development,in respect of which the restriction to enter into a contract with anominated builder will not apply;
b. purchase an existing lot in the Baldivis Parks development in respect ofwhich there is no restriction to enter into a contract with a nominated
builder;
c. purchase land or a house at another site (including other sites in Baldivisand other parts of metropolitan Perth).
Further information
(a) Name, postal address and contact telephone details of the person authorised toprovide additional information in relation to this notification:
Andrew GrahamSales and Marketing DirectorAustraland Property GroupLevel 2, 115 Cambridge StreetWEST LEEDERVILLE WA 6007
Telephone: +61 8 9214 7952Email: [email protected]
Dated <j ^ 2^^
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(Position in organisation)
11986291_6
DIRECTIONS
1. In lodging this form, applicants must include all information, including supportingevidence that they wish the Commission to take into account in assessing theirnotification.
Where there is insufficient space on this form to furnish the required information, theinformation is to be shown on separate sheets, numbered consecutively and signed byor on behalf of the applicant.
2. If the notice is given by or on behalf of a corporation, the name of the corporation isto be inserted in item 1 (a), not the name of the person signing the notice, and thenotice is to be signed by a person authorised by the corporation to do so.
3. Describe that part of the business of the person giving the notice in the course of thewhich the conduct is engaged in.
4. If particulars of a condition or of a reason of the type referred to in section 47 of theCompetition and Consumer Act 2010 have been reduced in whole or in part towriting, a copy of the writing is to be provided with the notice.
5. Describe the business or consumers likely to be affected by the conduct.
6. State an estimate of the highest number of persons with whom the entity giving thenotice is likely to deal in the course of engaging in the conduct at any time during thenext year.
7. Provide details of those public benefits claimed to result or to be likely to result fromthe proposed conduct including quantification of those benefits where possible.
8. Provide details of the market(s) likely to be affected by the notified conduct, inparticular having regard to goods or services that may be substitutes for the good orservice that is the subject matter of the notification.
9. Provide details of the detriments to the public which may result from the proposedconduct including quantification of those detriments where possible.
11986291_6