The building materials industry is set to come under greater scrutiny from the Australian Competition & Consumer Commission (ACCC) as major manufacturers flag the likelihood of having to buy from competitors to cover product shortfalls.
The Australian newspaper has reported that after a number of companies have shut down brick-making plants due to weak demand.
But when the market recovers, there will probably be a shortage of supply, meaning industry competitor may need to buy off one another to meet demand, according to Boral chief executive Mark Selway. He said this was likely in NSW and possibly Western Australia.
Such purchases of materials from competitors would be subject to ACCC supervision, in order to ensure that the industry did not collude to manage the market.
Selway was quoted: "As an industry, we wouldn't do that. What you have got to be very careful of is when you are rationalising capacity, and when you do get to a stage where you are buying from each other, that you are doing it at a very arm's length basis."
He said the industry did not share price details, cost figures or capacity information.
Any purchase of products from a competitor would need to happen at arm's length. It was clear there was excess capacity, particularly for some of the older products, such as bricks, roofing tiles and masonry, he said.
Boral has closed down a number of plants due to excess capacity in the industry, and plans to sell several more masonry operations in order to reduce capacity.
Lindsay Partridge, managing director of Brickworks, was quoted in the Australian saying it was not unusual for competitors to swap materials, in certain periods in the cycle.
