Adelaide, Austrialia - The Australian Competition and Consumer Commission (ACCC) has issued a statement of the issues it has found are involved in a proposal for bedding and carpet underlay makes Sleepyhead to buy the Sleepmaker and Dunlop Foams bedding and foam-manufacturing businesses from Pacific Brands.
The deal also involves conglomerate Pacific Brands acquiring the Wonderlay carpet underlay business from Sleepyhead
In its 19 Jan statement, ACCC notes that the proposed merger would reduce the number of large manufacturers of PU foam in this market from three to two.
ACCC also considers that even if Sleepyhead does not currently supply third parties, "the imminent threat of it doing so is likely to act as a competitive constraint, impacting on pricing and improving non-price conditions of supply in the market."
A further consideration, according to the ACCC, is that if Sleepyhead starts self supply, that would remove Sleepyhead as a large foam customer in the market, and thus increase excess capacity.
"This may result in increased competition between Dunlop Foams and Joyce to gain market share amongst a smaller pool of customers," ACCC said.
As a result, the regulatory body feels that the proposed acquisition is likely to raise competition concerns in the national market for the manufacture, conversion and wholesale distribution of PU foam.
ACCC invites market participants to comment on these concerns in relation to the PU foam market, by 4 Feb 2011 by email to [email protected] with the title Submission re Sleepyhead/Pacific Brands (attention Megan Cunningham and Narita Nagin).
Those interested can download the ACCC's statement from the website: www.accc.gov.au/