Acquirer: Bilfinger Berger Australia Pty Ltd; Target: Abigroup Ltd

Acquirer(s)

  • Bilfinger Berger Australia Pty Ltd

Target(s)

  • Abigroup Ltd

Summary

Bilfinger Berger Australia Pty Ltd proposes to acquire Abigroup Limited.

Market definition

Commission considered the market definition to be as follows:
1. separate national markets for the supply of road and bridge construction services involving:
(a) Large Projects; and
(b) Small Projects.
2. separate national markets for the supply of non-building construction services (water projects, civil works programmes and telecommunications infrastructure) involving:
(a) Large Projects; and
(b) Small Projects.
3. separate national markets for the supply of non-residential building construction services (offices, hotels, stadiums and hospitals) involving:
(a) Large Projects; and
(b) Small Projects.
4. separate national markets for the supply of residential building construction services with a distinction between:
(a) high density apartment buildings (Large Projects); and
(b) "cottage" residence (Small Projects).

Competition analysis

In December 2003, the Commission considered the proposed acquisition of Abigroup Ltd by Bilfinger Berger Australia Pty Ltd.

Commission considered the competitive impact of the proposed acquisition to be in the supply of road and bridge construction services involving Large Projects. The Large Projects markets in the Australian construction industry are characterised by a few large construction companies with strong balance sheets, technical skills and expertise, specialised equipment; and good reputation and goodwill.

The merged entity's ability to exercise market power post-acquisition is likely to be constrained by the following factors:
* in the Large Projects market, the presence of a strong competitor, Leighton Group of entities (includes Leighton Contractors, Thiess, John Holland, Transfield) may prevent any increase in prices over competitive levels;

* a large number of vigorous and effective medium sized competitors in the Australian construction industry including Walter Construction, Barclay Mowlem, Henry Walker Eltin, Clough and Macmahon, would constrain the merged entity; and

* medium sized competitors may form consortiums with international competitors or national competitors to tender for Large Projects.

Furthermore, the proposed acquisition may have pro-competitive effects in the supply of road and bridge construction services involving Large Projects as it may constrain the market dominance of Leighton Group.

Merger type

Horizontal

Guidelines thresholds

Unknown

Imports above 10%

Unknown

Initiation

Press