The Australian Competition and Consumer Commission will not intervene in the acquisition by George Weston Foods of the starch business of Bunge Industrial, which consists of a starch plant at Altona in Victoria and flour mill at Narrandera in NSW.
"Although the market in quite concentrated, and the proposed acquisition would reduce the number of domestic starch manufacturers from four to three, most customers did not express any concern about the acquisition," ACCC Chairman, Professor Allan Fels, said today.
"The ACCC conducted extensive market inquiries of the largest starch customers. Most customers believed that a high degree of competition would remain in the market due to the existence of two other large domestic starch manufacturers, Manildra and Starch Australia, a subsidiary of Goodman Fielder, and the possibility of importing starch.
"Weston also claimed that the new operating division would open up new opportunities in the international starch market through greater efficiency and technology exchange agreements with starch manufacturers in the US, Europe and South Africa.
"In reaching its decision the ACCC also considered the trade policies of the European Union which appear to have the effect of protecting European starch producers from import competition and also providing these producers with a competitive advantage in the export of gluten. These policies appeared to place Australian starch manufacturers at a significant competitive disadvantage, particularly in relation to the export of gluten to Asian markets.
"In considering merger proposals the ACCC will continue to consider the effect of overseas trade policies in markets subject to global competition. It is vitally important that a 'level playing field' is established in such markets so that Australian companies do not suffer a competitive disadvantage because of Australia's free trade policies".
"Although the market in quite concentrated, and the proposed acquisition would reduce the number of domestic starch manufacturers from four to three, most customers did not express any concern about the acquisition," ACCC Chairman, Professor Allan Fels, said today.
"The ACCC conducted extensive market inquiries of the largest starch customers. Most customers believed that a high degree of competition would remain in the market due to the existence of two other large domestic starch manufacturers, Manildra and Starch Australia, a subsidiary of Goodman Fielder, and the possibility of importing starch.
"Weston also claimed that the new operating division would open up new opportunities in the international starch market through greater efficiency and technology exchange agreements with starch manufacturers in the US, Europe and South Africa.
"In reaching its decision the ACCC also considered the trade policies of the European Union which appear to have the effect of protecting European starch producers from import competition and also providing these producers with a competitive advantage in the export of gluten. These policies appeared to place Australian starch manufacturers at a significant competitive disadvantage, particularly in relation to the export of gluten to Asian markets.
"In considering merger proposals the ACCC will continue to consider the effect of overseas trade policies in markets subject to global competition. It is vitally important that a 'level playing field' is established in such markets so that Australian companies do not suffer a competitive disadvantage because of Australia's free trade policies".