ACCC not to oppose proposed acquisition of Hans Continental Smallgoods by Primo
The Australian Competition and Consumer Commission will not oppose the proposed acquisition of certain assets of Hans Continental Smallgoods Pty Ltd by P&M Quality Smallgoods Pty Ltd (Primo).
"After extensive inquiries with market participants, the ACCC concluded that unless acquired by Primo, Hans would be likely to cease trading imminently and would be liquidated by the administrator. This position was confirmed in information provided by the administrator," Mr Samuel said.
After a lengthy and unsuccessful sales process, the Hans business was placed into voluntary administration by its owner in late 2008, at which time the administrator commenced a further sales process.
"Following exhaustive inquiries the ACCC formed the view that an acquisition by Primo of Hans, when compared to the situation if Primo did not acquire Hans, would be unlikely to result in a substantial lessening of competition," ACCC Chairman, Mr Graeme Samuel, said today.
The ACCC has had regard to the fact that there were no alternative bids for the Hans business capable of being finalised prior to the administrator being required to take steps to close the business. This position was confirmed in advice received from the administrator.
In addition, the ACCC conducted detailed inquiries into the likely effect on competition if the administrator were to close the business and auction its assets in order to determine whether this would be a less anti-competitive outcome than the acquisition by Primo. The ACCC concluded that there was only limited interest in the assets, and a likelihood that many of the assets would be lost to the industry permanently if sold at auction. Those which did remain would likely be offline for an extended period before they could be redeployed, affecting their efficacy as a competitive constraint. In these circumstances, and having regard to other confidential information, the ACCC considered that it was unlikely that the competitive situation would be much different with or without the acquisition by Primo.
"If the Hans business had not been in imminent danger of failing, the ACCC considered that substantial competition concerns existed with the proposed acquisition by Primo," Mr Samuel said.
"However, while the sale of Hans to Primo is likely to result in a reduction in competition compared with the current situation where Hans is operating as an independent competitor, following a rigorous assessment, the ACCC was satisfied that there was no alternative positive outcome for competition in this case.
"In this instance we were satisfied that the Hans business would cease to trade without the acquisition by Primo.
"The ACCC will assess any failing firm argument rigorously and will require clear information to show both that the target is likely to fail without the acquisition, and that this is not a better outcome for competition than an acquisition by a competitor."
Primo proposes to acquire the assets of Hans Continental Smallgoods, including certain inventory and equipment located at the Blacktown manufacturing facility but excluding the Hans Fresh business (which supplies fresh pork), the Blacktown manufacturing facility and the Swickers (Queensland) abattoir and associated pig growing operations.
The Hans Fresh business and Hans interest in the Swickers (Qld) abattoir and associated pig growing operations are proposed to be acquired by a third party, the Cameron Hall McLean Group.
A Public Competition Assessment will be available on the ACCC's website, www.accc.gov.au under Mergers, in due course.
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