The Australian Competition and Consumer Commission will not oppose the revised proposed acquisition of ITC Timber Pty Ltd by Gunns Limited after the ACCC's competition concerns were addressed with the exclusion of ITC Timber's 50 per cent stake in the SmartFibre wood chip joint venture from the transaction.
"On 25 November 2009, the ACCC announced its opposition to the proposed acquisition of ITC Timber by Gunns," ACCC chairman Graeme Samuel said today.
"The ACCC was concerned that the acquisition by Gunns of ITC Timber's 50 per cent stake in the SmartFibre wood chip joint venture would be likely to substantially lessen competition in the market for the acquisition of hardwood pulpwood in north-eastern Tasmania.
"To address the ACCC's competition concerns, the parties agreed to a new proposal whereby Gunns would not acquire ITC Timber's stake in SmartFibre. As a result of this restructure, SmartFibre will remain an independent competitor to Gunns in the acquisition of pulpwood and Tasmanian farmers and plantation owners will continue to receive competitive prices for the pulpwood they supply."
Competition in the market for the acquisition of residual timber in north-eastern Tasmania, which was identified as an issue that may raise competition concerns in the ACCC's Statement of Issues of 28 October 2009, will also be maintained as a result of the restructure.
The ACCC carefully considered the likely effects of the revised proposed acquisition on competition in the markets for the acquisition of hardwood sawlog in southern and north-eastern Tasmania. The ACCC identified these markets as issues that may raise competition concerns in its Statement of Issues.
Taking into account its detailed further inquiries after publishing the Statement of Issues, the ACCC concluded that the revised proposed acquisition would be unlikely to result in a substantial lessening of competition in these markets. The ACCC's inquiries also indicated that there will remain alternative buyers in each market with the capacity and the willingness to acquire more from suppliers. The principal supplier of hardwood sawlogs, Forestry Tasmania, would also be able to bypass Gunns if Gunns attempted to reduce prices.
"The ACCC is satisfied that the revised proposed acquisition of ITC Timber by Gunns, after taking account of the exclusion of the stake in the SmartFibre joint venture, is now unlikely to substantially lessen competition," Mr Samuel said.
Section 50 of the Trade Practices Act 1974 prohibits mergers and acquisitions that would have the effect, or be likely to have the effect, of substantially lessening competition in a market.