Concerns about Assa Abloy fire doors deal

14 November 2019

The ACCC has preliminary concerns that Assa Abloy’s proposed acquisition of E Plus Building Products Pty Ltd would significantly reduce competition in the market for fire door cores.

Assa Abloy, through its subsidiary Pyropanel, and E Plus both supply fire door cores to licensed fire door manufacturers throughout Australia.

“Our preliminary view is that the proposed acquisition raises significant competition concerns in what is an already highly concentrated market,” ACCC Commissioner Stephen Ridgeway said.

“There are only three companies who supply fire door cores to external manufacturers, outside their own vertically integrated business. Combining Pyropanel and E Plus would create a market with only two suppliers, with Assa Abloy controlling about two thirds of that market. The ACCC believes that there is a real chance that this will lead to higher prices for Australian businesses which require certified fire doors.”

The ACCC’s preliminary view is that any new supplier would be unlikely to enter the market in time, and at a sufficient scale, to prevent price increases by a combined Assa Abloy-E Plus entity.

“There are high barriers for a company to start supplying fire door cores in Australia due to the stringent testing and certification regime. Developing a range of certified products to compete with Pyropanel and E Plus is likely to be costly and time consuming, delaying new entrants,” Mr Ridgeway said.

“As Assa Abloy is now vertically integrated across all aspects of the door manufacturing business the proposed acquisition would also increase Assa Abloy’s incentives to block rival manufacturers from testing their products with Assa Abloy cores, locks, seals, and other door products.”

The ACCC spoke with a large number of industry participants, and most expressed significant concerns with the proposed acquisition. Industry participants are concerned that prices for door cores would increase and there would be fewer supply options. Industry participants are also concerned that competing door products would be blocked from being tested with Assa Abloy products.

The ACCC released a statement of issues and invites submissions from interested parties on the statement of issues by 28 November 2019. The ACCC’s final decision is scheduled for 5 March 2020.

Further information is available at Assa Abloy Australia Pacific Pty Ltd acquisitions of the Seal Doors Group and E Plus Building Products Pty Ltd.

Background

Fire door cores are the primary fire resistant component of fire doors, providing passive resistance to contain fire, smoke and heat within an area, while providing a safe passage for building occupiers to exit a building during an emergency.

Fire doors are required in some multi-unit residential buildings, and all commercial buildings, including hospitals and schools. Cores are distributed via a network of licenced fire door manufacturers throughout Australia. Fire doors are made up of a core, leaf, frame, hardware, seals, and then installed into a wall.

Suppliers of fire door components, including cores, are required to test their components in combination with other parts of a fire door set.

Assa Abloy is a global supplier of locks and security products. In Australia, Assa Abloy owns a number of brands which supply a range of door opening products, door locks, security solutions, fire door cores and related services. These brands include Abloy, Aperio, Cliq, Lockwood, Lorient, Traka, Whitco, Yale, and Pyropanel.

Pyropanel, an Assa Abloy subsidiary, also supplies fire door cores in Australia.

On 29 March 2019, Assa Abloy acquired the Seal Doors Group, comprising Seal Doors Pty Ltd and seven subsidiaries: Spence Doors, Action Building Systems, All Door Installations, Sliding Door Pockets, National Doors, Peninsula Fire Doors and Victoria Fire Doors. The Seal Doors Group manufactures, distributes and installs a range of doors, door frames, and other related door products and services.

Prior to the completed acquisition, E Plus operated within the Spence Doors business. As part of the arrangements for the completed acquisition, E Plus was separated from the Seal Doors Group, to be run independently as a standalone business.

Assa Abloy has sought ACCC clearance for the proposed acquisition of E Plus.

E Plus supplies the E-Core fire door core product.

Release number: 
211/19
ACCC Infocentre: 

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