Breville awaits the ACCC’s opinion on Sunbeam’s buyout bid

It sounded like a good idea at the time but now the bid for ownership of Breville Group by Sunbeam’s parent company, GUD Holdings, hinges on the ACCC’s interpretation the Trade Practices Act.

In response to the proposed buyout of Breville Group shares by GUD Holdings, the Australian Competition and Consumer Commission (ACCC) has asked for companies and individuals to submit their comments regarding the proposed acquisition.

The ACCC said it will use those comments to help it determine whether the proposed merger contravenes section 50 of the Trade Practices Act 1974, which “prohibits mergers and acquisitions that substantially lessen competition in the market, or are likely to do so”.

The deadline for these submissions is 23 October 2009. The ACCC proposes to review submissions and issue its decision on 26 November 2009.

“Once we’ve received the information back from the market, we will make a decision as to whether or not it risks breaching the Trade Practices Act,” said ACCC spokesperson Lin Enright today. “To be making any comment will be seen to be pre-empting the decision before we’ve received all the information.”

While the ACCC’s opinion is not legally binding, it is compelling. A partner of Australian commercial law firm TressCox, Alistair Little, indicated today that the ACCC’s decision can be challenged, but at what cost.

“The ACCC is entitled to indicate that it will not give approval to the merger or acquisition and where that happens, normally the parties won’t take the matter any further,” said Little. “But if they do decide to try to take the matter any further, then the ACCC can actually launch proceedings in the Federal Court to stop the merger taking place. Now that hasn’t happened for many years because the ACCC has a pretty solid track record of being right.”

And even if the ACCC allows the merger to go ahead, it can order the merged entity to stop supplying products in any market category in which the ACCC deems the merged company is too powerful.

“If, for example, it was decided that if Breville and Sunbeam were to merge and they would have too large a share of the market of, for example electric mixers, the ACCC could … allow the merger to proceed but only on the basis that an undertaking is given [by the merged entity] to divest itself … of one part or some parts of the business,” said Little.