The peak industry association PIAA has today lodged a submission to the ACCC supporting the IPMG and PMP merger, saying the commission must not stand in the way as it will be obstructing innovation and market adaptation.
Andrew Macaulay, CEO, PIAA says, ‘’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.’
“The ACCC should leave the industry to make the market more competitive, particularly internationally; to encourage investment and innovation and to create jobs,” he adds.
Macaulay and Mary-Jo Fisher, director of government relations at PIAA, will front acting director of the ACCC the week after next to discuss this issue. The ACCC will make its decision on February 23.
[Related: ACCC PMP IPMG merger concerns]
The PIAA submission stated the merger will be good for competition, will promote significant capital investment, promote innovation and assist in printing print jobs to Australia.
The ACCC released a statement of issues saying it was concerned the merger might lessen the competition in the heatset web offset market. However Macaulay counteracts the ACCC’s statement, saying customer power is one of the reasons why the merger will not lessen competition in the heatset web offset catalogue and magazine market.
‘’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,” he says.
The PIAA statement also says the 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.’
Macaulay says, “The merger will not materially affect price or service levels, because of the market-power wielded by these customers. The merger must happen now, whilst the barriers of entry to expansion in the market could hardly be lower.”
‘’Interest rates are low; finance is accessible; new and second-hand heatset web offset equipment is available; and exchange rates are in favour of those who want to upgrade technology or equipment,” he adds.
[Related: PMP and IPMG merger faces ACCC probe]
Fisher concurs with Macaulay saying this merger is good for the industry in the medium and long term as it will increase competition.
“There is plenty of big guys in the customer end to make sure there is competition in our supply end. Even with two significant players with the IVE group and the merged entity there are other medium to small printers for there to be a good level of competition,” she says.
Fisher says the ACCC must not stop the merger, she says, “The ACCC has to let this go and get out of the way on this occasion. The industry is adult enough to do it itself. We do have excess capacity and in many cases obsolete machinery.
“That excess capacity has resulted in customers because of the dwindling magazine market, the catalogue market has changed and now the customers are dictating the terms, that has created the excess in the marketplace. Our members know that and want to do something about it,” she says.
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