BlueScope market power raises concerns

The competition regulator has approved one of BlueScope Steel's planned takeovers of two local steel firms but raised concerns about the other one.

The Australian Competition and Consumer Commission said on Thursday it would not oppose BlueScope's takeover of Orrcon Steel despite concerns it would increase the former's already dominant market position.

However on the same day the ACCC also called for comments on the proposed takeover of fellow steel products maker Fielders, amid competition concerns.

Both takeover targets are owned by Hills Holdings - owners of the iconic Hills Hoist clothesline - who would reap $87.5 million from the deal.

One issue according to competitor companies is that BlueScope's campaign during a difficult restructure for anti-dumping tariffs against cheap steel imports has been so successful that it now has the power to unreasonably increase prices.

The ACCC found an Orrcon takeover would not leave rival manufacturers too dependent on BlueScope for pipes and tubing.

The rivals could bypass BlueScope and import the pipe and tube inputs they acquire or buy them from Australian Tube Mills, ACCC chairman Rod Sims said.

However competitors were concerned about the takeover of building products maker Fielders, which would increase BlueScope's dominance of the steel cladding and guttering markets allowing it to dictate prices of its Colorbond product.

"The ACCC considers that BlueScope already has some ability to discriminate in the supply of steel coil to rival roll formers," Mr Sims said.

The ACCC was examining whether the proposed acquisition would increase BlueScope's incentive to increase prices or reduce service to rivals in relation to its rollformed steel building products.

BlueScope shares were up 7.0 cents to $5.49 at midday.

AAP

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