Target(s)
- Pro-Pac Packaging Limited
Summary
Bennamon Pty Ltd (Bennamon), a related body corporate of Pact Group Pty Ltd (Pact Group), proposed to acquire an additional 30.17% shareholding in Pro-Pac Packaging Limited (Pro-Pac). Bennamon held an existing interest in Pro-Pac, an 18.1% shareholding.Market definition
The parties overlap in relation to the manufacture and supply of the following products:- non-beverage rigid plastic containers, less than 10 litres in size;
- small plastic industrial containers, between 10 litres and 25 litres in size;
- plastic cartridges;
- plastic closures.
The ACCC did not consider it necessary to form a definitive view on the geographic scope of the markets.
As Pro-Pac is a manufacturer and distributor of plastic packaging products, the ACCC also considered the vertical effects of the proposed acquisition - in particular, the potential for foreclosure which may occur with respect to: (i) manufacturing competitors of Pact Group which rely upon Pro-Pac to distribute their products; and (ii) third party distributors which rely upon Pact Group for the supply of packaging products for their distribution operations.
Competition analysis
The ACCC formed the view that the proposed acquisition was unlikely to substantially lessen competition in any market. Factors informing this conclusion included:- Pro-Pac's limited manufacturing presence in each relevant market;
- the existence of a number of alternative manufacturers which would compete with Pact Group and Pro-Pac in each relevant market post-acquisition;
- although barriers to entry are high, barriers to expansion for existing manufacturers appear to be comparatively low;
- the availability of imported plastic cartridges and plastic closures.
The ACCC concluded that Pact Group is unlikely to have the ability or incentive to foreclose its manufacturing rivals or Pro-Pac's distribution rivals due to:
- the existence of a number of alternative distributors available to supply the plastic packaging products of competing manufacturers;
- the existence of a number of alternative plastic packaging manufacturers from which packaging distributors are able to source products.
Timeline
| Date | Event |
|---|---|
| 07/07/2011 | ACCC commenced review under the Merger Review Process Guidelines. |
| 25/07/2011 | Closing date for submissions from interested parties. |
| 28/07/2011 | ACCC requested further information from the parties to the proposed acquisition. ACCC timeline suspended pending receipt of the requested information. |
| 04/08/2011 | ACCC received further information from the parties. ACCC timeline recommenced. |
| 23/08/2011 | ACCC announced it would not oppose the proposed acquisition. |