ACCC has issues with after-school merge
The ACCC has some concerns about a proposed merger between two of the nation's largest after-school care companies.
The competition regulator has released a negative preliminary report on Camp Australia's bid to buy Junior Adventures Group, which operates OSHClub and Helping Hands centres.
Camp Australia, which is already the biggest out of school hours care operator in the country, is now owned by US private equity group Bain Capital.
Junior Adventures Group is owned by the private equity firm Advent Partners.
The ACCC is concerned that the $100 million deal will result in higher fees and lower quality care, with one in four of the nation's before- and after-school services being run by the same provider.
“I think our main concern is that you have got the two biggest players in the out-of-hours school care market getting together and they will be, combined, by far the largest player, which will dwarf all other players,” said ACCC Chairman Rod Sims.
“Our concern is that a loss of competition could see parents having to pay higher prices for out-of-hours school care and could see schools lose a bit of their bargaining position.”
He said the lack of competition could drive standards down.
“The fact they would be such a heavyweight, they could start setting service standards and if you have got such a strong market position, you may seek to lower service standards and raise prices, so we've got concerns on both price and service.”
Camp Australia already runs 780 centres, and wants to take over another 400 centres currently run by Junior Adventures Group.
The National Outside School Hours Services Association agrees with the ACCC's preliminary findings.
“For schools, it has shed light on what is actually happening, the foreign takeover of the out-of-school-hours sector and the idea that government-funded subsidies to families will actually be going to foreign investors,” the group’s chair Robyn Monro Miller told the ABC.
“The fact they are owned by an investment company means shareholder profits are going to take precedence over the care and wellbeing of children, and I think that is something we really need to consider as a community.
“Is that what we want for the future of children in childcare services?”
In late 2016, the NSW Government declared Camp Australia ineligible to win or renew any government contracts following a number of breaches.
OSHClub and Helping Hands are still eligible to apply for government contracts in NSW.
There are concerns that the merger will give Camp Australia a back-door into the NSW market.
“The concern about service standard of Camp Australia did feature in our thinking. It was informed by what is going on in NSW but the concern was a bigger one than just using it as a back-door entry point,” Mr Sims said.
The ACCC’s final report is expected in October.