The Australian Competition and Consumer Commission will not intervene in the proposed acquisition of Pauls Limited by Parmalat Australia Limited, Acting ACCC Chairman, Mr Allan Asher, said today.
Pauls is a Queensland-based food processing company which specialises in manufacturing and distributing fresh milk and a range of other dairy products. Pauls has substantial fresh milk operations in Queensland (where it has about 50% of the market) and in Victoria (where it has about 40% of the market).
Parmalat Australia is a wholly owned subsidiary of Parmalat Finanziaria S.p.A, a large-scale Italian-based international food processing company with significant dairy manufacturing and distribution operations in Europe, Canada, the United States and South America. In 1996 Parmalat acquired Haberfields Milk Pty Limited located at Albury-Wodonga. Parmalat Australia now operates from two factories in Albury-Wodonga, and produces a range of fresh milk products, long life milk, dairy desserts, cheeses and cream.
"While Parmalat produces and distributes fresh milk in Victoria, it presently has a small share of the market (in the order of 2%) and so the acquisition of Pauls did not raise any competition concerns in that market under section 50 of the Trade Practices Act 1974. In addition, the proposed Parmalat/Pauls merger did not raise competition issues in any other Australian markets," he said.
Parmalat has a reputation as an innovative and competitive player in those markets in which it operates overseas, and the ACCC understands that Parmalat intends bringing a similar approach to the operation of Pauls' businesses in Australia. Recently, Pauls was also the subject of a takeover proposal by National Foods Limited, announced in late April.
In March, the ACCC considered a confidential submission from National Foods and formed the view that certain aspects of the takeover proposal, unless modified, would lead to a substantial lessening of competition in contravention of section 50 of the Trade Practices Act. In response National Foods revised its proposal.
The ACCC agreed not to oppose the National Foods proposal, but only after it had accepted certain court-enforceable section 87B undertakings proffered by National Foods, to: divest to a purchaser approved by the ACCC certain Victorian milk processing assets in the merged entity which constitute a significant proportion of Pauls' market milk processing capacity in Victoria; and relinquish or assign the Danone Licence to produce yoghurts and dairy desserts.
"Given Parmalat's small presence in the relevant Australian markets, no such divestitures were required by the ACCC in this case," he said.