But on the other side, the news was not so good for GrainCorp, the struggling grains, oils, and cereals group which is looking to sell a major asset to a rival.
GrainCorp wants to sell its terminals business (which stores and handles vegetable oils and similar products) to ANZ Terminals, a competitor for $350 million, including debt.
Drought-hit GrainCorp could do with the money coming from the sale with revenues and earnings hit hard by the continuing dry, especially in NSW.
In a statement yesterday the ACCC revealed it had raised preliminary concerns about the deal.
ANZ Terminals and GrainCorp both provide port-side bulk liquid storage services in NSW, Victoria, and South Australia, where they compete to store liquids including edible oils, tallow, non-flammable industrial chemicals and base oils for customers.
“Our preliminary view is that the acquisition will remove a significant competitor in what is an already concentrated industry in NSW, Victoria, and South Australia,” ACCC Chair Rod Sims said in yesterday’s statement.
“We are also considering the impact on competition in the east coast states more broadly, including Queensland.”
“In some locations, the acquisition will lead to ANZ Terminals becoming the only storage provider for some liquid products. This loss of competition could result in higher prices for customers, or lower levels of service,” Mr. Sims said.
The ACCC considers that there is limited vacant land available for lease by new storage providers at the ports, creating a key barrier to entry for potential new competitors.
“Even where land may be available, it is highly uncertain that any new entrants would emerge in the bulk liquids sector to challenge ANZ Terminals,” Mr. Sims said.
The ACCC said ANZ Terminals has provided a section 87B undertaking to divest the Osborne terminal in South Australia. The ACCC is still considering whether the undertaking will address the competition concerns in South Australia.
“The proposed undertaking does not address the preliminary concerns we have in New South Wales and Victoria,” Mr. Sims said. The Commission has extended the time for submissions and examination of the issues and will make a final decision by October 17.
GrainCorp shares eased 2%% to $8.62.
