Printing businesses PMP and IPMG have been cleared to go ahead with a merger despite the competition regulator acknowledging the move will lessen competition in the industry.
Australian Competition and Consumer Commission chairman Rod Sims has announced the regulator will not oppose the merger of ASX-listed PMP and the Hannan family-owned IPMG but that it was "a finely balanced decision".
"While the ACCC considers that the merger is likely to lessen competition, we do not believe that it reaches the threshold of being a substantial lessening of competition," Mr Sims said.
The ACCC expressed concern about the merger when the companies announced their plans in October, saying it would look at the impact of competition in the magazine and catalogue printing industry.
A previous merger attempt by the two companies was rejected in 2001 but Mr Sims said market conditions had since changed.
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"There has been a significant reduction in demand for magazine printing and there is excess capacity in the industry," he said.
Mr Sims also said the recent expansion of ASX-listed print and communications business IVE Group was likely to provide competition to the merged PMP-IPMG.
Under the merger plan, PMP will acquire IPMG's business by issuing PMP shares at 63.5 cents a share.
Post-merger, the Hannan family will own 37 per cent of the combined business.
The companies say the merger will save $40 million a year in costs and help them remain competitive in a declining printing market.
The two companies hold around 75 per cent of the market between them.
PMP shares had leapt by 10 cents, 15.2 per cent, to 76 cents at 1101 AEDT.
