The Australian Competition and Consumer Commission has agreed to end litigation proceedings against Boral Limited following Boral's withdrawal of its bid for cement and concrete manufacturer Adelaide Brighton and provision of enforceable undertakings to the Federal Court.
Boral has given court enforceable undertakings that it will:
- not nominate a person for election or vote its shares in Adelaide Brighton in favour of the election of any person who is an associate of Boral to the Board of Adelaide Brighton for a period of 1 year without the prior written consent of the ACCC and
- not acquire, by way of a takeover bid or pursuant to exemption 9 of section 611 of the Corporations Act 2001 (a provision that allows a company to increase its interest beyond 20% in another entity at the rate of three per cent each six months), any relevant interest in shares in Adelaide Brighton for a period of one year without the prior written consent of the ACCC.
The recent developments end litigation proceedings instituted by the ACCC in June 2004 following its decision that the acquisition was likely to breach section 50 of the Trade Practices Act 1974.
The withdrawal of the bid and provision of court enforceable undertakings is a successful outcome for the ACCC which held the view that the proposed takeover was likely to lead to a substantial lessening of competition", ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC's objective is to prevent transactions that are likely to lead to higher prices for consumers and businesses that rely on the products of merging parties. The ACCC's investigation showed that the acquisition of Adelaide Brighton by Boral would lead to a substantial lessening of competition in cement, aggregates, flyash, concrete and concrete masonry product markets in Australia.
"The acquisition would have removed a significant and predominantly independent source of cement from the industry, effectively leaving the market in the hands of the two major manufacturers. Adelaide Brighton and its distribution arm, Independent Cement and Lime, have proven to be strong competitive forces in the cement industry.
"In addition, the competition provided by Adelaide Brighton would not have been replaced by cement imports, as argued by Boral in its submissions to the ACCC. Potential cement imports were unlikely to constrain the domestic cement manufacturers due to the high barriers to sustained and substantial importing", Mr Samuel said.
"The assessment in this matter highlights the benefits of the new guidelines for informal merger review that I announced recently. These guidelines will ensure that all parties will engage in a much more transparent and open manner during the consideration of a proposal by the ACCC. This matter also demonstrates the ACCC's resolve, and confirms my statements, that the ACCC will not hesitate to take action to prevent transactions that are likely to breach the Act and harm Australian consumers and businesses".