Amcor Limited - proposed acquisition of Aperio Group Pty Limited

Summary

Amcor Limited proposed to acquire Aperio Group Pty Limited

Market definition

The ACCC considered the likely impact of the proposed acquisition on the national market for the supply of value-added flexible packaging, which includes printed, laminated and converted flexible packaging. In particular, the ACCC focused its competition assessment on the merger parties' principal area of overlap, being the supply of value-added flexible packaging to manufacturers of fast moving consumer goods (FMCG).

Competition analysis

The ACCC noted that a merged Amcor and Aperio would account for a large portion of sales of value-added flexible packaging to Australian customers. The ACCC conducted detailed market inquiries and closely considered whether the proposed acquisition, by removing Aperio, would result in the merged firm having the ability to increase prices of value-added flexible packaging and / or decrease product quality or service levels.

The ACCC formed the view that the proposed acquisition was unlikely to substantially lessen competition in the national market for value-added flexible packaging. Factors informing this conclusion included:

- industry sales data and market inquiries indicated that actual and potential import competition would be a direct constraint on the merged firm. Many FMCG customers were successfully managing their supply chain and realising cost savings through importing value-added flexible packaging. Certain overseas suppliers offer Australian warehouse and distribution services to better compete with domestic suppliers. The ACCC's review did not reveal the existence of any significant barriers which would hinder the growth of import competition;

- there are a number of alternative domestic suppliers, including certain suppliers who have demonstrated a willingness to invest and increase capabilities in order to secure new contracts;

- barriers to expansion for existing value-added flexible packaging manufacturers are not high;

- while switching suppliers does take some time and investment on the part of both the customer and supplier, the ACCC was presented with many examples of FMCG customers switching suppliers to obtain better terms; and

- FMCG customers generally have sophisticated procurement practices, with some having the benefit of accredited overseas suppliers currently supplying their regional affiliates outside Australia. Also, certain customers had sponsored entry or expansion to increase supply options. In this regard, FMCG customers hold a degree of countervailing power vis-a-vis the merged firm.