E-Malt.com News article: 3166

Australia: Antitrust regulator the Australian Competition & Consumer Commission announced on Tuesday, 31 August 2004 conditional approval for the merger of marketing concern ABB Grain Ltd. with malting and logistics concern AusBulk Ltd. and its major shareholder United Grower Holdings Ltd., Dow Jones posted on the same day.

The approval is conditional on ABB Grain providing acceptable court-enforceable undertakings that provide fair and reasonable access to port storage and handling for grains export after the merger, said ACCC Chairman Graeme Samuel in a statement.

The approval came despite concerns about the anticompetitive impact of the merger on barley marketing and trading in South Australia state, where the companies operate, Samuel said. Samuel said ACCC noted concerns that state law covering barley exports impedes competition in barley trading in South Australia and the fact that AusBulk controls AusMalt, one of Australia's main producers of malt.

ABB Grain holds a monopoly over the export marketing of barley produced in South Australia. "Other concerns identified included the high level of concentration in the various markets and the nature and extent of vertical integration that the merged entity would enjoy throughout the barley supply chain," he said in a statement. The merged entity will become by far the largest buyer of malt barley in South Australia, he said.

But ACCC considers it unlikely this will result in a substantial lessening of competition in malt barley purchasing, he said. This is because of the large amount of malt barley exported, the limited demand for malt barley for domestic consumption in South Australia and the limited nature of competition that now exists to buy malt barley in the state, he said.

ACCC noted there is scope already for domestic trading in feed barley and other grains, there are alternative buyers of malt barley interstate and that some protection is offered to South Australian growers after the merger given their ability to sell barley into the collective sales pool operated by ABB Grain. Samuel said ACCC was worried ultimately about the vertical integration of AusBulk with ABB Grain, given its legislated export marketing monopoly.

ACCC was concerned the merged company would use its market power in storage and handling at export terminals in South Australia to deny access to, or discriminate against, competing traders and grain exporters, he said.

"The undertakings the parties have offered to provide are aimed at ensuring competitive access by all parties to the merged entity's bulk storage and handling assets and services at ports in South Australia in the foreseeable future," he said.



01 September, 2004