ACCC to oppose Industrial Galvanizers Corporation acquisition of Transfield's Brisbane galvanizing business

The Australian Competition and Consumer Commission will oppose Industrial Galvanizers Corporation's acquisition of Transfield Pty Limited's galvanizing business located at Richlands in Brisbane, Acting ACCC Chairman, Mr Rod Shogren, said today. IGC and Transfield are the two largest providers of galvanizing services in Australia.

Transfield wants to sell its three galvanizing plants located at Seven Hills in Sydney, Richlands, Brisbane and Townsville. The ACCC has informed the parties that it does not object to the sale of either the Seven Hills or Townsville plants to IGC.

However, in relation to the Richlands plant, the ACCC believes that the acquisition by IGC would lead to a substantial lessening of competition in the provision of galvanizing services in the Brisbane region.

The ACCC has conducted extensive inquiries and found widespread concern among market participants in relation to the merged entity's position in Brisbane.

The ACCC found that the market is predominantly regional with customers rarely shipping goods large distances to be treated. In this respect, the ACCC notes recent legislative changes requiring that it consider the competitive impact of proposed mergers and acquisitions on regional markets.

The proposed acquisition would result in IGC having a market share in excess of 80 per cent of the market for galvanizing services in the Brisbane region.

Transfield is the only competitor that is capable of matching IGC's capacity to galvanize longer steel lengths. The only remaining competitor in Brisbane, Sunstate Coatings, is constrained in its ability to compete with IGC on longer steel lengths due to the small size of its galvanizing bath.

In the event of IGC acquiring the Richlands facility, the Commission believes that there would be little effective competitive constraint on the conduct of the merged entity.

The ACCC found that there are significant regulatory barriers (in particular environmental approval) to establish a suitably large galvanizing plant to compete with IGC in the galvanizing of longer steel lengths.

The ACCC also notes that IGC produces lighting columns/poles and safety noise barriers in competition with some of its galvanizing customers. The ACCC is concerned that IGC could use a dominant position in the galvanizing market to leverage influence into other markets into which galvanizing services are required.