The Australian Competition and Consumer Commission today announced that it would oppose the proposed merger between Independent Print Media Group and PMP Limited. IPMG and PMP are both involved in publishing, printing and magazine distribution.
"The proposed merger raises substantial competition concerns in respect of both printing and magazine distribution such that it is likely to result in a breach of section 50 of the Trade Practices Act 1974", ACCC Chairman, Professor Allan Fels, said today. "Section 50 prohibits mergers and acquisitions that will have the effect, or are likely to have the effect, of substantially lessening competition in a market.
"IPMG and PMP are the two largest commercial printers in Australia. They own the majority of heat set web presses in Australia. These presses are used to produce high volume magazines, newspaper inserts and retail catalogues. The merger of PMP and IPMG would give them more than 75 per cent of this market, worth in excess of $1.5 billion per annum".
Market inquiries were conducted with a large number of customers with varying printing needs. These inquiries indicated that smaller printers using other printing processes such as sheet fed printing are unlikely to provide a competitive constraint to the merged parties.
Inquiries also indicated that the potential for magazines, inserts and retail catalogues to be printed overseas is limited.
The ACCC also concluded that the proposed merger is likely to result in a substantial lessening of competition in the Australian market for distribution of magazines to retail outlets.
"Magazine publishers rely on distributors to manage the supply of their publications to the large number of retail outlets which sell magazines. The merger of the distribution businesses of IPMG and PMP would give the merged firm more than 50 per cent of the distribution market, with much of the remainder controlled by a subsidiary of Australia's largest magazine publisher, ACP.
"The proposed merger raises significant concerns as to the ability of independent magazine publishers to secure competitive distribution".