The Australian Competition and Consumer Commission (ACCC) has confirmed it will not stand in the way of the acquisition involving BGC Cementitious following alterations to the deal.
The decision comes after the merger parties, which include Cement Australia, Holcim, Heidelberg Materials Australia (HMA) and Adbri Pty Ltd, amended their original proposal to acquire assets of BGC Cementitious. The ACCC had previously expressed concerns about the initial proposal, but a new proposal, including a revised structure with the sale of certain assets to Adbri, was put forward.
The new proposal will see BGC divest WA Cementitious with cement assets and some specific readymix concrete (RMX) plants to Cement Australia, Holcim and HMA. Adbri will acquire the majority of the RMX assets from BGC, as well as its aggregates, asphalt, transport and materials technology centre assets.
Following this review, the ACCC said competitors of RMX supply would be able to “constrain HMA and Holcim post-acquisition across Perth” and the amended acquisition would likely not “substantially lessen competition in any market”.
ACCC commissioner Dr Philip Williams said the ACCC conducted a thorough review of the proposal.
As part of its review of the proposed acquisition, the ACCC reviewed several key areas of the proposal. This included the margins of HMA, Cement Australia, Holcim and Adbri Pty Ltd throughout the supply chain, the profit incentives available to those parties’ post acquisition, the market power those parties would possess following the acquisition.
“An initial proposed structure for the acquisition of BGC by Cement Australia, Holcim and HMA raised significant preliminary competition concerns for us, particularly in relation to the competitive overlap in RMX and aggregate quarries in Western Australia,” Dr Williams said.
“We examined the amended acquisition proposal very closely. In particular we looked at both the loss of BGC as a competitor in the supply of RMX and the risk that Cement Australia or Adbri would use their position as cement suppliers to hinder the ability of rival RMX suppliers to compete.
“While we acknowledge strong concerns from some market participants, we found that Cement Australia and Adbri would be likely to compete with each other to supply cement to RMX competitors after the acquisition.”
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