The Australian Competition and Consumer Commission will not oppose the proposed acquisition of Abigroup Limited by Bilfinger Berger Australia Pty Ltd, ACCC Chairman, Mr Graeme Samuel, said today.
"The ACCC gave particular consideration to the effect of the proposed acquisition on construction services for large projects, and views were sought from industry competitors and customers", Mr Samuel said. "Following these discussions, the ACCC concluded that the proposed acquisition would be unlikely to result in a substantial reduction in competition".
Bilfinger Berger is a wholly owned subsidiary of Bilfinger Berger AG, a multinational construction organisation. Bilfinger Berger trades through its Australian subsidiary, A. W. Baulderstone Holdings Pty Ltd, in building and construction activities in Australia.
Abigroup's main trading activities include building and construction with a primary focus on road construction in Queensland, Victoria and New South Wales. Building and Construction work accounts for approximately 84 per cent of Abigroup's revenue. Recent projects undertaken by Abigroup include the WestLink M7 Motorway (Western Sydney Orbital) project in a joint venture with Leighton Contractors.
In its investigation, the ACCC considered the competitive impact of the proposed acquisition on large construction projects (generally over $100 million) and smaller construction projects including road and bridge construction, non-building construction (water projects, civil works programs and telecommunications infrastructure) and non-residential building and construction services (offices, hotels, stadiums and hospitals).
"Bilfinger and Abigroup are likely to face significant competitive constraints from strong competitors such as the Leighton Group of companies, which includes Leighton Contractors, Thiess, John Holland and Transfield. Furthermore, the proposed acquisition may have the effect of providing Abigroup with the financial and balance sheet support to better compete in the large project markets against the Leighton Group. The Leighton Group is presently the dominant participant in these markets.
"The ACCC noted that there are a large number of vigorous and effective competitors in the Australian construction industry including Walter Construction, Barclay Mowlem, Henry Walker Eltin, Clough and Macmahon. These firms may independently compete or form consortiums with local or international construction firms to tender for Australian construction projects.
"Although international construction firms such as Ferrovial, Obayashi, Skanska, Bouygues and KBR Halliburton do not generally tender independently for Australian construction projects, these international competitors act as joint venture or consortium partners with Australian construction firms to provide financial resources, project management and technical expertise.
"The ACCC notes that significant industry rationalisation has occurred in recent years such that segments of the industry appear highly concentrated. The ACCC will carefully assess any future proposed acquisitions which may substantially lessen competition in breach of the Trade Practice Act 1974".