The ACCC will not oppose PMP IPMG merger, meaning the two print giants are free to merge into Australia’s largest ever print company, 15 years after being knocked back by the ACCC.
The new business will have a turnover of around $1.2bn, with plants all around the country, although the future of some will now be uncertain. Older plant and equipment will definitely go.
Rod Sims, chairman, ACCC, says, “This was a finely balanced decision. While the ACCC considers that the merger is likely to lessen competition, we do not believe that it reaches the threshold of being a substantial lessening of competition.
“Market conditions have changed since the ACCC opposed a proposed merger between PMP and IPMG in 2001. There has been a significant reduction in demand for magazine printing and there is excess capacity in the industry.
“Furthermore, the IVE group has recently expanded through acquisitions and winning major tenders. We consider that IVE is likely to constrain the merged company. Other smaller printers and newspaper publishers also compete in the market.”
The ACCC says it will release a Public Competition Assessment outlining further information about its conclusions in due course.
Historically, both PMP and IPMG have been the two largest heatset web offset printers in Australia.
The new company is set to compete with IVE, now the second biggest printers in the country. IVE’s recent acquisitions of Franklin, a specialist catalogue printer based in Sunshine Victoria, and AIW which primarily prints catalogues as well as some magazines in Springvale, Victoria did not hold up the deal.
The ACCC’s concerns centred around the possibility of reduced competition in heatset web offset printing, and the potential foreclosure of rival distributors.
PIAA made a forceful submission to the ACCC in support of the merger, with Andrew Macaulay, CEO, saying it would be a black day for the industry if it did not go ahead. He said, An ACCC blockage would lock the market in its present state – lacking in efficiency, with excess capacity and obsolete equipment. In so doing, the ACCC would be consigning the market and the industry to the past’ “
‘’Particularly in the catalogue market, customers are dominated by chain stores, such as supermarkets and merchandise stores. These customers hold the whip-hand. They are strong negotiators who decide how, when and where the print product will be supplied.’’
Macaulay says that the merger will not materially affect price or service levels, because of the market-power wielded by these customers.
In its submission, PIAA says, ‘’These customers will not hesitate to use overseas print companies or indeed finance expansion or new entrants into the marketplace to get the best price possible for the products they want.’’
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