The Australian Competition and Consumer Commission has decided to oppose Yamaha Motor Australia's proposed acquisition of Telwater Pty Ltd, citing concerns the merger would substantially lessen competition in the wholesale supply of outboard motors and likely result in higher prices, lower quality, and fewer choices for consumers.

The decision follows an in-depth investigation into the proposed acquisition, which would have seen Yamaha purchase 100% of Telwater shares from Bombardier Recreation Products Inc (BRP), alongside a property in Coomera, Queensland, used to manufacture, fit, and warehouse aluminium trailer boats.

Telwater is the market leader in aluminium trailer boats with approximately 60% to 70% market share through its Quintrex, Stacer, and Yellowfin brands. Yamaha is the leading supplier of outboard motors in Australia.

Bundling Strategy at Heart of Concerns

The ACCC's primary concern centres on the combined entity's ability and incentive to leverage Telwater's dominant position in aluminium trailer boats to disadvantage rival outboard motor suppliers through bundling or tying strategies.

"This acquisition is likely to significantly disadvantage rival outboard motor suppliers in competing effectively with Yamaha," ACCC Commissioner Dr Philip Williams said. "Our investigation found that a combined Yamaha/Telwater would likely have both the ability and incentive to leverage Telwater's significant market position in aluminium trailer boats into the outboard motors market."

The ACCC identified two key linking strategies that could harm competition. Bundling involves selling two or more products at a single price, potentially through significant targeted discounts on Telwater boat and Yamaha motor packages to dealers, possibly combined with higher standalone prices for Telwater boats. This practice would incentivise dealers to limit their sales of rival outboard motors.

Tying involves making the purchase of one product conditional on another, potentially requiring dealers that purchase Telwater aluminium trailer boats to also become a Yamaha outboard motor dealer and contractually restricting the dealer from selling competing outboard motor brands.

Impact on Dealer Networks and Competition

The ACCC expressed concern that bundling or tying the supply of Telwater boats to Yamaha outboard motors would lead many dealers who currently sell Telwater aluminium trailer boats and non-Yamaha outboard motors to switch some or all of their outboard motor purchases to Yamaha.

"As a result, competing outboard motor suppliers would likely face a material loss of wholesale sales and higher costs of distributing their products to end customers," Dr Williams said. "Competing outboard motor suppliers that lose access to the Telwater dealer network would then likely face significant difficulty and increased costs in re-establishing or expanding their presence in Australia."

The ACCC's assessment principally focused on the impact of the proposed acquisition on a national market for the wholesale supply of outboard motors in Australia, though competition concerns may also arise in specific local markets.

Market Context and Product Complementarity

Aluminium boats and outboard motors are complementary products, often purchased by consumers together. This complementary nature proved highly relevant to the ACCC's competition assessment, which tested whether the merged firm would have the ability and incentive to link the two products and the competitive effects of such a linking strategy.

Aluminium boats are primarily used for recreational boating in Australia and are generally lighter, more durable, and less expensive than fibreglass boats. Trailer boats are small marine vessels that can be fitted to a trailer for easy transportation and generally range between two to nine metres in length.

Yamaha Motor Company manufactures outboard motors in Asia, primarily in Japan, which are then imported into Australia by its wholly owned subsidiary, Yamaha Motor Australia. Yamaha supplies the outboard motors to dealers Australia-wide, who then supply them to end customers.

Telwater manufactures aluminium trailer boats and trailers in Australia and supplies them to dealers, who then sell to end customers. Telwater currently supplies custom-fitted trailers sold together with its boats (branded under Telwater), or loose trailers (under the brand name Move) that can be used for any trailer boat.

Telwater also supplies a limited number of outboard motors to dealers as part of a package with a Telwater boat and potentially a trailer. Telwater is a non-exclusive distributor of Mercury outboard motors, with Mercury also supplying its outboard motors to dealers itself and via other wholesalers.

Business Continuity Confirmed

In a note to dealers, Telwater General Manager Sam Heyes confirmed BRP had received notification of the ACCC's decision and is considering all available options to determine the best path forward.

"Until further announcements, BRP remains the owner of Telwater," Heyes said. "We will continue to operate the business as usual, with no change to our current production and day-to-day operations. We will keep you informed of any future developments."

Implications for the Marine Industry

The ACCC's decision represents a significant intervention in Australia's marine industry consolidation, prioritising competition in the outboard motor market over potential vertical integration benefits. The ruling suggests the regulator views maintaining dealer choice in outboard motor brands as essential to competitive pricing and product innovation for consumers.

For dealers currently stocking Telwater boats alongside non-Yamaha outboard motors, the decision preserves the status quo and protects their ability to offer customers diverse motor options without facing pressure to favour a single supplier. Competing outboard motor manufacturers, including Mercury, Suzuki, Honda, and others, retain access to the substantial Telwater dealer network that might otherwise have been foreclosed.

The outcome leaves BRP weighing its options for Telwater's future ownership, whilst Yamaha must pursue growth in the Australian aluminium boat market through organic expansion or alternative acquisitions that don't raise similar competition concerns. Whether this decision fundamentally reshapes strategic planning across the marine industry or simply delays inevitable consolidation remains to be seen as market dynamics continue evolving.

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