The Australian Competition and Consumer Commission has issued a Statement of Issues on the proposed acquisition of Recall Holdings Limited (ASX: REC) by Iron Mountain Incorporated.
The Statement of Issues seeks further information on certain competition issues which have arisen from the ACCC’s market inquiries to date.
“The ACCC’s preliminary view is that the proposed acquisition would raise competition concerns in a number of markets for the supply of physical document management services,” ACCC Chairman Rod Sims said.
Recall and Iron Mountain are the two largest providers of physical document management services in Australia. The combined national market share of the merger parties would be between 59 and 71 per cent, and regional markets would be similarly concentrated.
“The ACCC is concerned that the transaction would remove the close competition between Recall and Iron Mountain. There are also barriers to customer switching, including high costs to move documents from one provider to another, and the merged firm would be comparatively unconstrained,” Mr Sims said.
“The proposed acquisition could also leave customers vulnerable to price increases or reduced service levels. Smaller suppliers or new entrants would be unlikely to constrain the merged entity.”
Iron Mountain and Recall compete closely for both national customers who require document storage in multiple locations, and local customers who require storage in just one region. Few other suppliers can supply customers in multiple regions. The individual regional markets are also concentrated, despite the presence of several smaller suppliers in each.
The ACCC invites further submissions from interested parties in response to the Statement of Issues by 19 November 2015. The ACCC expects to announce its final decision on 15 December 2015.
The proposed acquisition is also being considered by competition authorities in the United States, United Kingdom and Canada.
Background
Iron Mountain is a global supplier of information management services, based in the United States. Recall is an Australian public company that is also a global supplier in the information management industry. In Australia, Iron Mountain has operations in every state and territory. Recall has a presence in every state and territory, except the Northern Territory.
Further information on the ACCC’s merger review is available at the ACCC’s public register.