Another big local takeover is in trouble with the key competition regulator with the agreed bid from US document storage giant Iron Mountain for its smaller competitor Recall (REC) now in doubt because of worries about a contraction in options for local customers.
ACCC concerns about the huge near $9 billion bid from Canadian group Brookfield for the ports and rail operator Asciano is in trouble because of competition fears in Western Australian grain shipments and Queensland coal transport.
Offshore the proposed multi-billion dollar mega deal between giant brewers InBev and SAB Millar could be in trouble here because of a concentration in market dominance by inBev.
Now the $2.5 billion Recall deal is up in the air because of worries the ACCC has about Iron Mountain’s proposed takeover.
ACCC chairman Rod Sims said the watchdog’s preliminary view was that the takeover would "remove the close competition" between the two players.
“The ACCC’s preliminary view is that the proposed acquisition would raise competition concerns in a number of markets for the supply of physical document management services,” ACCC Chairman Rod Sims said.
Recall shares fell as much as 6.3% early yesterday before recovering to be down 3.3% at the close at $7.33.
Recall and Iron Mountain are the two leading providers of physical document management services in Australia, the ACCC said in a statement yesterday.
The Commission said this combination would see the national market share of the merger parties around 59% and 71%, and regional markets would be similarly concentrated, it added
"There are also barriers to customer switching, including high costs to move documents from one provider to another, and the merged firm would be comparatively unconstrained," Mr Sims said in a statement.
"The proposed acquisition could also leave customers vulnerable to price increases or reduced service levels. Smaller suppliers or new entrants would be unlikely to constrain the merged entity.”
Interestingly, the Commission said it did not believe the proposed acquisition would be likely to lead to a substantial lessening of competition in markets relating to the supply of digital document management services or data protection services.
The ACCC issued a statement of issues for the market to pick over. Submissions from interest parties close on November 19, and the ACCC will announce its final decision on December 15.
The proposed acquisition is also being considered by competition authorities in the United States, United Kingdom and Canada.
