The Australian Competition and Consumer Commission will not oppose the proposed acquisition by Ridley Corporation Limited of the salt operations of Penrice Soda Products Pty Ltd, ACCC Chairman, Mr Graeme Samuel, said today.
Ridley is the largest supplier of salt to domestic consumers. Penrice is Australia's only producer of soda ash and sodium bicarbonate, and has salt fields and refining operations in South Australia. Ridley proposes to acquire Penrice's salt operations and enter an exclusive, long-term arrangement for the supply of salt to Penrice.
"Following market inquiries among Australian salt suppliers and customers, the ACCC considers that the proposed acquisition is unlikely to substantially lessen competition", Mr Samuel said.
"Penrice's existing salt production has been largely directed to internal consumption as an input to the production of soda ash and sodium bicarbonate. The remaining volume of Penrice's production, which has been sold in the wholesale salt market, is relatively small. Further, while Penrice has been a small but vigorous competitor in wholesale salt in recent years, increased internal demand by Penrice would limit its future influence on the salt market with or without this transaction. Moreover, the merged firm is likely to face an effective competitive constraint from the existence of alternative suppliers in South Australia, Queensland and Victoria".
These alternative suppliers include Pacific Salt, Mulgandawa, Hattah Salt, Copeland/Pyramid Salt and Dartagook. Some of these suppliers have significant existing salt reserves and/or plans to expand their supply of salt. Their excess capacity represents a very significant proportion of salt demand by South Australian and eastern states customers, and also significantly exceeds external salt sales by Penrice in recent years.
The ACCC did not consider that the potential supply of salt from large Western Australian producers was a realistic constraint in the Eastern seaboard market, in view of high freight costs.