Acquirer: Pacific Brands Clothing & Textiles Group (Pacific Dunlop); Target: Kolotex (Australia) Pty Ltd

Summary

On 6 August 2003 Pacific Brands Clothing Pty Ltd, a company in the Pacific Brands Clothing & Textiles Group, acquired Kolotex (Australia) Pty Ltd

Market definition

The national market for the manufacture and wholesale of hoisery, including pantyhose, knee-high stockings and sockettes. Separate markets for non-premium and premium hoisery were also considered but the Commission took the view that these likely represented market segments rather than separate markets, although it was unecessary to resolve the issue given that, on any view of the market, the Commission's thresholds for the exercise of unilateral market power would be crossed.

Competition analysis

On 25 November 2003 the Commission decided not to take any action with respect to the acquisition of Kolotex (Australia) Pty Ltd by Pacific Brands.

While the merged entity holds in excess of the 80% of the national hosiery market, crossing the Commission's Merger Guidelines thresholds for the exercise of unilateral market power, the Commission felt that there existed a number of significant competitive constraints upon the market behaviour of the merged entity.

In particular the Commission considered that the level of imports in the market, around 15%, would guard against any prices rises by the merged entity. Readily available imports from countries such as China were also considered likely to provide opportunities for new entry into the market or expansion by existing market participants. The Commission considered the role played by tariff protection, but took the view that rising trend imports indicated that tariffs did not constitute a substantial barrier to entry, particularly given the legislated reduction in Textile, Clothing & Footwear tariffs scheduled to take effect in January 2004.

Merger type

Asset Sale

Guidelines thresholds

Crossed

Imports above 10%

Yes

Initiation

Parties

ANZSIC code

4722