BHP Billiton Limited - proposed acquisition of WMC Resources Ltd

Summary

BHP Billiton Limited proposed to acquire all of the issued shares of WMC Resources Limited, and sought informal clearance from the ACCC in relation to the acquisition. BHP Billiton and WMC are both diversified resources companies, with operations in a range of commodities. The areas of overlap were in the production of copper, nickel, cobalt, gold and silver. There were also potential overlaps in the production of mineral sands in the future.

Market definition

The Australian markets for each of refined copper, primary nickel, cobalt, gold, silver and mineral sands.

Competition analysis

There is no overlap in BHP and WMC's operations in respect of gold, refined copper or mineral sands in Australia. In the global markets for the production of gold and copper, BHP will have a relatively small market share (less than 3% in each case). This, together with the existence of several significant competitors in these markets, led the ACCC to conclude that the acquisition is unlikely to raise competition concerns in these markets.

WMC does not yet produce mineral sands, however based on anticipated future production estimates, BHP's market share will not exceed the merger thresholds and is unlikely to raise competition concerns.

In the Australian markets for the production of cobalt, silver and primary nickel, the ACCC formed the view that the acquisition is unlikely to raise competition concerns on the basis that BHP is constrained by the threat of imports, substitutes are readily available from a number of other competitors, and the prices of the products are internationally referenced, making it unlikely that BHP could increase prices above competitive levels.

After consideration of the merger factors and conducting market inquiries, the ACCC formed the view that the proposed acquisition is unlikely to result in a substantial lessening of competition and the ACCC would not oppose the acquisition.

Initiation

Parties