PVC joint venture adds to Australian plastics production rationalisation

The Australian Competition and Consumer Commission will not intervene in a joint venture between Australia's two producers of PVC, based on the information provided by the parties.

The joint venture between ICI and Auseon follows the ACCC's approval of two other initiatives to rationalise plastics production at the Altona chemicals complex in Victoria.

PVC is mainly used in the building industry for pipes but is also found in wire cables, in packaging for consumer and export goods such as food and in fashion apparel and footwear.

"Access to PVC plastic at competitive prices is important because it is used widely by Australian industry," ACCC Chairman, Professor Allan Fels, today. "ICI and Auseon have said that there are significant imports of PVC. They also say that the joint PVC venture will put their operations on a more even footing with much larger competitors overseas. It should result in improved efficiency and less waste leading to increased output and the replacement of some imports."

In 1996 the ACCC considered the joint venture between Dow and Huntsman for the production of polystyrene and the acquisition by Kemcor of Hoechst's HDPE and polypropylene plant. It found that raw plastic is widely traded in the Asian region and throughout the World. Imports were found clearly to act as a constraint on Australian HDPE and polystyrene prices.

"The recent changes in the plastics industry show that world scale production is possible without a loss of competition," Professor Fels said. "The ACCC has recognised that reduced tariffs and internationalisation have put pressure on domestic business to increase efficiency."

The ACCC also noted that for some uses of PVC there is a degree of substitutability between PVC, other plastics and other materials.

Further information Professor Allan Fels, Chairman, pager (016) 373 536 Ms Lin Enright, Director, Public Relations, (06) 264 2808