A.C.C.C. NOT TO OPPOSE ASSOCIATED BRITISH FOODS ACQUISITION OF...

A.C.C.C. NOT TO OPPOSE ASSOCIATED BRITISH FOODS ACQUISITION OF BURNS PHILP YEAST/BAKERY DIVISION

The Australian Competition and Consumer Commission will not oppose the proposed acquisition of the Yeast and Bakery Division of Burns Philp and Company Limited by Associated British Foods plc, ACCC Chairman, Mr Graeme Samuel, said today. "The ACCC has carefully considered the competitive impact of the proposed merger and, following extensive market inquiries, has reached the view that the acquisition is unlikely to substantially lessen competition in the relevant markets", he said. "The only area of horizontal overlap is in the bread improver market. Although the acquisition exceeds the ACCC's thresholds for the exercise of coordinated market power, the ACCC concluded that strong competitors, low barriers to entry and significant countervailing power held by customers will effectively constrain the merged entity in this market. "In relation to the yeast market, the acquisition will transfer the yeast business of Burns Philp to British Foods, which does not currently produce yeast. Accordingly, while the degree of vertical integration of British Foods will increase as a result of the transaction, this will be offset by a corresponding reduction in the vertical integration of Burns Philp". In its analysis, the ACCC considered the competitive impact of the proposed merger in the state-based bread markets, national yeast market and the national bread improver market. The ACCC noted that the merged entity will continue to face strong competition from Bakels-Lesaffre Yeast, the other major yeast supplier in the market. The acquisition does not involve any new contracts for the supply of yeast to contestable customers and appears unlikely to increase barriers to new entry or expansion by existing players. The ACCC also found that competition in the bread market is unlikely to be affected. Market concentration will remain unchanged as a result of the transaction, since British Foods is not acquiring Burns Philp’s baking business, Goodman Fielder. Media inquiries: Mr Graeme Samuel, Chairman, pager/mobile 0408 335 555 Ms Lin Enright, Director, Public Relations, (02) 6243 1108 General inquiries: Infocentre 1300 302 502 MR 207/04 22 September 2004