Boral gains a swift hearing

Boral gains a swift hearing
30 June 2004

Building materials major Boral has secured an expedited hearing for its court battle with the competition watchdog over its $1billion dollar-plus takeover bid for cement rival Adelaide Brighton, and this should allow the case to finish by November, reports The Australian. Federal Court judge Peter Heerey yesterday set August 30 as the date for the trial to start and set aside five weeks for the case until the first week of November.

The Australian Competition and Consumer Commission is seeking to block Boral’s bid for Adbri, arguing that it will lead to less competition, particularly in the cement market.  Key to the case would be the viability of imports to provide competition to Boral and rival Cement Australia, which would, between them, dominate the Australian market.  In its statement of claim, the ACCC says that with Adbri under its belt, Boral’s share of the Australian cement market would rise to 55 per cent from 26 per cent. With Cement Australia the two companies would account for about 95 per cent of the market.

The ACCC contends that import volumes in recent years have been "relatively insignificant", averaging less than 3 per cent of the market. Excluding imports by Adbri, the market share of imports falls to less than one per cent, the ACCC says.

"Actual or threatened imports of cement don’t constitute, and in the foreseeable future won’t be likely to constitute, an effective constraint on the supply of cement," it says.  Boral argues that imports will always be a competitive threat to the Australian market. It has estimated that there is a 50Mt supply overhang in Asia compared with a total cement market in Australia of just 9Mt.
The ACCC, however, claims the supply excess in Asia is diminishing and there are barriers to imports such as the cost of shipping, long lead times and the potential for transport damage.

Published under Cement News