The Australian Competition and Consumer Commission has proposed authorisations of a proposed joint venture between DuPont (Australia) Limited and Ticor Limited on behalf of their subsidiaries, Howson Algraphy (Australasia) Pty Limited (Howson) and Ticor Chemical Company Pty Limited (TCC), to manufacture sodium cyanide and of associated exclusive marketing arrangements, Acting ACCC Chairman, Mr Allan Asher, announced today.
Had the parties not approached the Commission for authorisation, they may have contravened section 50 of the Trade Practices Act which prohibits mergers and acquisitions that substantially lessen competition or section 47 of the Act which prohibits exclusive dealing.
"It is proposed that Howson and TCC would form an unincorporated joint venture vehicle to make solid and liquid sodium cyanide at the existing Gladstone plant," Mr Asher said. "The venture would mean a substantial upgrade of existing plant and lift current capacity by 14,000 tonnes per annum, to 40,000 tonnes.
"The exclusive marketing agreement supersedes one already in place, giving DuPont Australia the right to sell all product manufactured at the plant for an additional ten years.
"The ACCC felt that there was potential for anti-competitive detriment from these proposals stemming mainly from the entrenchment of the existing market structure and the limited role imports were likely to play in imposing a competitive restraint.
"However, the parties also identified the following as public benefits:
- capital investment in the industry;
- provision of technology to improve environmental standards in sodium cyanide manufacture;
- improvement in plant efficiency;
- increase in the value of exports;
- import substitution;
- benefits to the economy, both local and national; and
- enhancement of the ability of the joint venture parties to compete in the market.
"On balance, the ACCC has concluded that the public benefits relating to efficiency, import replacement and export enhancement, and environmental benefits were likely to outweigh the possible anti-competitive detriment and propose to grant the authorisations requested by the parties."
In its inquiries relating to the matter, Commission staff contacted many Australian gold producers and other government bodies.
There is scope for the Commission to hold a pre-decision conference with respect to exclusive dealing arrangements. Such a conference can be called only by the parties to the authorisation or by a party that has provided the Commission with a response to its inquiries. If a pre-decision conference was to occur, it would be likely to be on 6 May 1996 because of the statutory timetable the Commission faces with regard to authorisations.
The Commission is due to publish a final Determination on the matter on about 8 May 1996.