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Australia, Sydney: The Australian Competition and Consumer Commission, or ACCC, is keeping a close watch on a slew of merger and joint venture proposals, Deputy Chairwoman Louise Sylvan said Tuesday, August 10. Sylvan detailed four such proposals the antitrust regulator is currently assessing, which she said is indicative of a dynamic process that is underway in the grains sector. "That process is far from complete, in our view," she told an agricultural conference, according to Dow Jones.

The grains industry has been undergoing significant rationalization in the past decade or so, she said. Restrictive marketing arrangements are being collapsed in some areas and state-owned grain storage, handling and marketing groups are being replaced by private companies, she said. At the same time, mergers, alliances and joint ventures with major industry participants are occurring more often, she said.

This is increasing vertical integration in the industry between trading, storage and handling, and downstream processing operations, she said.

Where a market is highly concentrated and parties seek to merge or combine, the ACCC will generally examine the matter closely to ensure anticompetitive consequences don't arise, she said.

The ACCC recognizes that the grains industry is under substantial pressure to deliver efficiency gains and improve coordination of supply and movement of grain, Sylvan said. To a large extent, these cost pressures arise from increasing global competition, and contribute to the number of formal and informal collaborations in the industry, she said. "We expect this trend to continue and we expect to continue to consider a range of developments in the industry in future," she said.

Yet while the ACCC will assess each proposed merger or arrangement on a case-by-case basis to see whether it raises concerns in terms of anticompetitive structures or practices, the ACCC has the capacity to allow anticompetitive arrangements, as long as there is a public benefit, she said.

Sylvan detailed the four cases that the ACCC is currently assessing in the industry. These involve all major industry participants.

A proposal to merge barley marketing concern ABB Grain Ltd. and storage, handling and malting concern AusBulk Ltd. has "quite far reaching implications for the grains sector," she said. She cited competition concerns over the possibility that a single entity will control these businesses in South Australia state, where the two companies now chiefly operate.

In general, the ACCC will closely examine any proposed mergers where parties hold export monopoly rights, such as with ABB Grain, with the export of barley produced in the state, she said.

The ACCC is also considering two proposed equal joint venture arrangements, both involving wheat export monopoly operator AWB Ltd. One of these is in eastern Australia with GrainCorp Ltd., to provide logistics services for export grain, and the other a similar proposal with Western Australia-based Cooperative Bulk Handling Ltd. Both proposals are aimed at improving supply chain efficiency and cutting costs.

The ACCC also is overseeing GrainCorp's sale of its 50% stake in Australian Bulk Alliance, which GrainCorp acquired when it merged with Grainco Australia Ltd. in 2003.

AusBulk holds the other 50% of this alliance, which operates upcountry silos in southeast Australia and has a 50% stake in an export terminal in Melbourne. AWB holds the remaining 50% stake in the Melbourne terminal.

The ACCC is monitoring this sale to ensure it won't have any anticompetitive effects on relevant markets, Sylvan said.


11 August, 2004