The Australian Competition and Consumer Commission will not oppose the proposed merger between Australian Cement Holdings and Queensland Cement Limited, Acting ACCC Chairman, Mr Ross Jones, said today.
The proposal will merge the two parties' assets and operations involved in the production, distribution and supply of cement, flyash and blast furnace slag.
In its investigation, the ACCC considered the competitive impact of the proposed merger on the supply of cement and other materials. Extensive market inquiries were conducted with customers and competitors. Following these inquiries, the ACCC concluded that the proposed merger would be unlikely to result in a significant reduction in competition in any relevant market.
There is minimal geographic overlap in the current operations of ACH and QCL, with the nature of competition in each Australian State influenced by the location of cement production and distribution facilities.
ACH produces cement in Tasmania and New South Wales, with sales mostly in Victoria and NSW where its main competitors are Blue Circle Southern Cement (owned by Boral Limited), and Adelaide Brighton Limited. ACH does not have spare capacity to supply into Queensland.
QCL operates predominantly in Queensland, where its major competitor is Sunstate Cement (a joint venture between Boral and Adelaide Brighton).
There is also evidence that during the past five years, imports have played an increasing role in the environments in which the merging firms operate. In a number of instances, customers have used the threat of importing cement to achieve a greater level of competition between domestic cement suppliers.
In respect of slag and flyash, the proposed merger will not lead to a substantial lessening of competition. ACH is not currently involved in the supply of ground or crushed blast furnace slag. In respect of flyash, the regions serviced by ACH and QCL's interests do not generally overlap. Also, there are a number of other firms that acquire flyash from power stations for use in the cement and concrete industries.
The ACCC also examined the likely effect on competition of the sale of QCL's Excel quarries and pre-mix concrete operations. These will be sold to CSR and Pioneer and will not lead to lessening of competition in the relevant concrete markets.