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Rival distributors expected to maintain strong competition post Liberty-Steelforce acquisition: ACCC

  • Posted on Thursday 13th, June 2019.

The Australian Competition & Consumer Commission (ACCC) will not oppose the proposed acquisition of Steelforce Holdings by GFG Alliance Australia (Liberty).

Liberty and Steelforce both manufacture and distribute long steel products, which are used for construction and industrial purposes.

The ACCC’s review focused on the wholesale supply and distribution of three types of long steel products: hollows, structurals and merchant bars.

“The ACCC looked closely at this proposed acquisition,” said ACC Deputy Chair, Mick Keogh. “We decided not to oppose it because we considered that imported products and rival distributors will continue to provide strong competition.”

The proposed acquisition would combine Steelforce’s hollows manufacturing mill in Dalian, China, with Liberty’s existing long steel manufacturing assets.

“Imports have made up more than 25 per cent of the total wholesale supply of hollows in Australia for many years,” said Keogh.

“In addition, imported long steel products which meet Australian specifications are also readily available.

“In relation to the market for the wholesale supply of hollows, we believe Liberty’s position will be constrained not just by competition from imports, but also by Bluescope’s domestic manufacturing.”

The proposed acquisition would also combine Steelforce’s long steel distribution business, which operates in Queensland, New South Wales, Victoria and Western Australia, with Liberty’s existing distribution business, Liberty Metalcentre.

“The proposed acquisition will make Liberty the largest distributor of long steel products in Australia, with a substantial market share,” said Keogh.

“However, in each state, Liberty will continue to face competition from other distributors.

“Our inquiries also found that customers of long steel products can easily switch between distributors if one is offering a more competitive price.”

Liberty is part of GFG Alliance, an international group of businesses founded and owned by the British Gupta family. Liberty acquired the Whyalla steelworks in South Australia and the former OneSteel steel distribution business from Arrium in 2017. Liberty manufactures long steel products from facilities in New South Wales, Victoria, South Australia and Queensland. It distributes these products, along with a portion of third-party long steel products, through its distribution network.

Steelforce is an Australian steel manufacturer and distributor. Steelforce manufactures one type of long steel product at its facility in Dalian, China. It supplies these products, along with other types of long-steel products imported from third-parties, through its distribution business.

Long steel products have a range of construction and industrial applications. The three categories of long steel products that are relevant to this transaction are hollows, structurals and merchant bars.

Hollows are essentially long steel tubes and can be circular, square or rectangular in shape. They are inputs for construction projects, including buildings, bridges and infrastructure.

Structurals are elongated beams used to provide structural support in infrastructure, such as buildings, utilities infrastructure and warehouses.

Merchant bars are flat, round or square elongated bars and are used in light applications. Such applications include balustrades, furniture, gates and motor vehicles.

Distributors purchase long steel products from Australian manufacturers or from overseas mills through import traders. End-users of long steel products include builders, tradespeople, retail hardware stores and those in agricultural and industrial manufacturing industries.

In January, Liberty was awarded the West Gate Tunnel Project contract.

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