The Australian Competition and Consumer Commission will not intervene in the joint venture between Dow Chemical (Australia) Ltd and Huntsman Chemical Company Australia Pty Ltd for the production and marketing of polystyrene in Australia.

The ACCC found that the joint venture is unlikely to substantially lessen competition.

Under the terms of the joint venture Dow will produce general purpose polystyrene and Huntsman will produce high impact polystyrene. Marketing will be undertaken jointly.

"Dow and Huntsman have said that their Australian plants are substantially smaller than those with which they compete overseas," ACCC Chairman, Professor Allan Fels, said today. "They claim this joint venture will enable more efficient production and thereby maintain, and even expand, the level of exports which are already substantial.

"The ACCC found that polystyrene is a commodity that is widely traded in the Asia-Pacific region and beyond. There have been significant Australian imports and exports of polystyrene in recent years and the evidence suggests that imports are likely to act as a constraint upon domestic pricing. Since July 1 1996 polystyrene imports have become even more competitive with Australian produced polystyrene because the tariff has reduced to five per cent," he said.

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

"Although the ACCC has decided not to oppose the joint venture at this time, it will result in a sole Australian producer of general purpose polystyrene and a sole Australian producer of high impact polystyrene. Therefore the ACCC intends to monitor the competitive effects of this joint venture."