ACCC not to oppose proposed acquisition of Alcan by Rio Tinto

The Australian Competition and Consumer Commission will not intervene in the acquisition of Alcan Inc by Rio Tinto plc, ACCC Chairman, Mr Graeme Samuel, said today.

"The ACCC closely considered the potential for competition concerns arising from the aggregation of assets in aluminium, alumina and bauxite production," Mr Samuel said.

"One focus of the ACCC's assessment was the supply of bauxite in Queensland. The ACCC had particular regard to Alcan's Cape York deposits as a source of potential bauxite supply in competition with Rio Tinto's Weipa mine," Mr Samuel said.

"The ACCC investigated this issue in detail and considered all available information, including internal documents from the relevant parties. The ACCC decided that the extent of potential competition between Rio Tinto and Alcan in the supply of bauxite which would be removed by the acquisition would not be sufficient to indicate a likely substantial lessening of competition.

"The ACCC also closely investigated the aggregation of refineries producing alumina and took into consideration the high levels of vertical integration in the industry. The acquisition results in significant aggregation in alumina production, particularly along the east coast. However, the ACCC considered that other sources of competitive alumina supply exist for the non-integrated purchasers of alumina, particularly from diversion of currently exported alumina into the domestic market.

"The third key focus of the ACCC's investigation was aluminium. The ACCC considered the possibility of separate markets for some types of aluminium, particularly extrusion billet, due to a lack of substitutability from the perspective of purchasers and from the perspective of suppliers. However, the ACCC considered that for all aluminium products competitive tension would remain in the domestic market and that ultimately the threat of imports would also be likely to act as a competitive constraint.

"Bauxite, alumina and aluminium are all, to a greater or lesser extent, export industries for Australia," Mr Samuel said. "Even though these are export industries, the ACCC focussed on the supply of the relevant products to customers located in Australia."