Australia's Antitrust Regulator Approves Glencore-Xstrata Merger, Says Not A Threat to Competition

Australia's antitrust regulator, the Australian Competition and Consumer Commission (ACCC), has extended its stamp of approval to the proposed takeover of commodities trader Glencore International Plc over blue-chip miner Xstrata Plc.

"The ACCC did not consider that there was a likelihood of anti-competitive effects arising from the vertical integration of Xstrata's mining and production activities with Glencore's extensive third-party trading activities," the Commission said in its decision that was published on its Web site on Wednesday.

Weighing the possible effect and influence of the proposed alliance both on Australian and global markets for coal, copper, nickel, cobalt and zinc, the commission said it was unlikely that the acquisition extends too much market power to give the merged group.

"The merged entity would have a relatively low share of global production and would compete against a number of remaining substantial competitors, the commission said in its decision. "Any impact in global markets would have minimal impact on Australian users of those products or end-consumers."

The proposed alliance is due to shareholders' vote of approval in mid-July.

Glencore International Plc already actually owns 34 per cent of Xstrata Plc, but plans to further hike this controllership has faced opposition from some minority shareholders who are concerned by the terms of the deal. Investors claimed the $270 million worth retention payments for Xstrata Plc's top 73 managers were exorbitant. Qatar Holding, the sovereign wealth fund of Qatar and the second largest shareholder in Xstrata Plc at 11 per cent, meanwhile said Glencore International Plc should increase its offer to buy Xstrata Plc.

Glencore offered 2.8 of its shares for every one of Xstrata's. 

Read more:

Xstrata, Glencore Mega-Merger Shelved for Good or Waiting for Right Time?

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