Australasian brewing rivals, Lion Nathan and Foster's, have been in preliminary negotiations regarding sharing brewing facilities in Western Australia, according to a report in the Australian Financial Review.

The report suggests that Foster's approached its rival about sharing production facilities in response to the rising costs of transporting beer from Melbourne to Western Australia as its sales there have increased. Its Matilda Bay plant in Western Australia is running at full capacity while Lion Nathan's Swan Brewery in the region is reportedly running at just 50% capacity.

Lion Nathan confirmed that preliminary informal discussions had taken place. "It is too early to say whether there will be any formal discussions to pursue this possibility," said Lion Nathan. "It is important to note we have had no concrete proposal from Foster's to consider." Foster's Australian brewing division, Carlton United Breweries, said that it was still speculation.

However, any such co-operation would be bound to attract interest from the Australian Competition and Consumer Commission (ACCC). The two companies have a combined market share of more than 96%. ACCC chairman, Allan Fels, said any initiative which led to a reduction in competition would be closely scrutinised. "We always look with the utmost caution at production sharing on a cessation of production competition in duopolies," Fels said.