The ACCC will not oppose BGC's proposed acquisition of Midland Brick.
BGC and Midland Brick both manufacture and supply clay bricks in Western Australia, along with other clay and masonry building products. BGC is also a residential and commercial builder.
"We examined the proposed acquisition carefully, because it would combine two of the three major suppliers of clay bricks in the West Australian market," ACCC Commissioner Stephen Ridgeway said.
"A key factor in the ACCC's decision was the likelihood that Midland Brick and its production capacity would exit the market entirely if the proposed acquisition did not proceed."
The ACCC investigated the likelihood that Midland Brick would continue to operate or be sold to an alternative purchaser if the proposed acquisition did not proceed, and reviewed internal business records and conducted compulsory examinations of key industry participants.
"There was sufficient evidence that showed that without the proposed acquisition the owners of Midland Brick would move to demolish the brick kilns, and the exit of Midland Brick from the market would likely be brought forward," Mr Ridgeway said.
"We concluded that the exit of Midland Brick would be a worse outcome for competition compared to the proposed acquisition proceeding."
Some market participants warned that the exit of Midland Brick's production capacity could contribute to a significant shortage of bricks if demand were to suddenly increase quickly.
"Feedback from industry participants indicated that it was important that the production capacity of Midland Brick remained in the market over the medium term to meet future demand," Mr Ridgeway said.
"We determined that regardless of whether BGC acquires Midland Brick, there will likely be only two brick manufacturers supplying Western Australia, and so the proposed acquisition is unlikely to substantially lessen competition."
In relation to the supply of masonry products, the ACCC concluded that the proposed acquisition was unlikely to result in a substantial lessening of competition in relation to those products.
Further information is available at BGC - Midland Brick.
Background
BGC is a vertically integrated manufacturer of building products, and residential and commercial builder in Western Australia. BGC supplies a range of clay and masonry products, including clay bricks through its Brikmakers brand.
Midland Brick is a manufacturer of building products, including clay bricks, and is based in Western Australia. Midland Brick also produces clay pavers, masonry pavers, and masonry blocks.
In August 2019, Boral agreed to sell Midland Brick to property developers, Linc Property Pty Ltd and Fini Group Pty Ltd (now trading as Hesperia Property Pty Ltd and Birchmead Pty Ltd, together the consortium). The transaction completed in September 2020.
BGC proposes to acquire the Midland Brick business, including a lease on which two of Midland Brick's three operating brick kilns are situated, as well as brick inventory. The consortium intends to retain and develop the remaining land. The proposed acquisition also includes Midland Brick's masonry business, and a parcel of land upon which the masonry business is situated.
