The Australian Competition and Consumer Commission* will not oppose the acquisition of of Comalco's aluminium rolling mills at Yennora, NSW by KAAL Australia Pty Ltd, a joint venture between Alcoa International Holdings Company (a wholly owned subsidiary of the Aluminum Company of America) and Kobe Steel Australia Pty Ltd (a wholly owned subsidiary of Kobe Steel Ltd of Japan).
The Alcoa/Kobe joint venture partners have applied for a Tariff Concession Order to remove the tariff on aluminium bodystock which is being processed.
"The ACCC had explored the possibility of the tariff's removal on bodystock, with Alcoa's agreement," ACCC Chairman, Professor Allan Fels, said today. "The Yennora mills produce aluminium foil, general sheet and bodystock for beverage cans. Alcoa does not produce foil or general sheet (substantial quantities of which are imported), but it is currently the only other domestic producer of aluminium can bodystock at Point Henry, Victoria.
"While the parties argue that aluminium beverage cans compete with glass and PET bottles and that steel is a potential substitute in canmaking, the ACCC's market inquiries indicated those products presently are not effective competitive constraints. Indeed, price increases in the order of 30 to 40 per cent in 1994 did not significantly alter the demand for aluminium bodystock, indicating limited responsiveness to price increases.
"In making its decision, the ACCC considered Comalco's stated intention to leave the downstream aluminium semi-fabrication sector. Information provided to the ACCC raised serious questions about the long term economic viability of Comalco's rolling mills at Yennora as an independent entity.
"The acquisition will deliver the entire domestic market for aluminium bodystock production to Alcoa. The only constraint would be imports, which are currently subject to a tariff of seven per cent, reducing to five per cent in July 1996.
"The removal of the tariff on aluminium bodystock will limit the ability of the sole domestic supplier to raise prices charged to canmakers. These prices flow through to consumers of products such as beer and soft drinks."
The Alcoa/Kobe joint venture partners have applied for a Tariff Concession Order to remove the tariff on aluminium bodystock which is being processed.
"The ACCC had explored the possibility of the tariff's removal on bodystock, with Alcoa's agreement," ACCC Chairman, Professor Allan Fels, said today. "The Yennora mills produce aluminium foil, general sheet and bodystock for beverage cans. Alcoa does not produce foil or general sheet (substantial quantities of which are imported), but it is currently the only other domestic producer of aluminium can bodystock at Point Henry, Victoria.
"While the parties argue that aluminium beverage cans compete with glass and PET bottles and that steel is a potential substitute in canmaking, the ACCC's market inquiries indicated those products presently are not effective competitive constraints. Indeed, price increases in the order of 30 to 40 per cent in 1994 did not significantly alter the demand for aluminium bodystock, indicating limited responsiveness to price increases.
"In making its decision, the ACCC considered Comalco's stated intention to leave the downstream aluminium semi-fabrication sector. Information provided to the ACCC raised serious questions about the long term economic viability of Comalco's rolling mills at Yennora as an independent entity.
"The acquisition will deliver the entire domestic market for aluminium bodystock production to Alcoa. The only constraint would be imports, which are currently subject to a tariff of seven per cent, reducing to five per cent in July 1996.
"The removal of the tariff on aluminium bodystock will limit the ability of the sole domestic supplier to raise prices charged to canmakers. These prices flow through to consumers of products such as beer and soft drinks."