ACCC approves CSR and Boral brick manufacturing joint venture

Posted on 18 Dec 2014 by Tim Brown

The Australian Competition and Consumer Commission (ACCC) has said that it will not oppose a proposed joint venture between CSR and Boral to manufacture clay bricks.

CSR and Boral are both suppliers of a range of products including plasterboard, insulation, fibre cement, and roof tiles to the building and construction industry in Australia. CSR and Boral’s proposed joint venture only includes the manufacture, marketing, and supply of clay bricks in eastern Australia.

“The ACCC’s view is that the proposed joint venture would be unlikely to substantially lessen competition,” ACCC Chairman Rod Sims said.

Mr Sims added that the ACCC believed Boral’s claim that it would be “unlikely to remain” in clay brick manufacturing in eastern Australia if the joint venture does not proceed.

“In accordance with its usual practice, the ACCC tested the claims made, including by conducting an extensive review of business records and the financial performance of Boral Bricks East and the examination under oath of two senior executives of the joint venture parties,” said Mr Sims.

“The ACCC concluded that there was sufficient evidence to support the claims that Boral would exit brick manufacturing on the East Coast and that, on balance, the ACCC should not oppose the joint venture.”

The proposed venture, which was originally announced in April, is expected to generate revenue in the order of $230m with initial overhead savings of $7-$10m per annum.

Boral’s CEO & Managing Director, Mike Kane said: “We are very pleased with the ACCC’s decision to allow our east coast bricks joint venture to proceed. This is good news for customers, employees and shareholders. With Australian brick manufacturing being challenged as a result of a reduction in brick usage and high input costs, the joint venture will allow us to drive efficiencies across the combined network of operations, creating a more sustainable business.”

CSR’s CEO & Managing Director, Rob Sindel added: “This joint venture is about retaining manufacturing in Australia and maintaining clay bricks as a choice for consumers. It will strengthen opportunities for employees and ensure that customers benefit from a strong supplier in the highly competitive cladding market in Australia”.