Competition concerns with proposed acquisition by Borg of Alpine’s MDF manufacturing assets

7 July 2016

Correction: an earlier version of this press release had the ACCC’s expected final decision date as 15 September 2016. The correct date is 1 September 2016.

The Australian Competition and Consumer Commission is encouraging feedback on the competition concerns outlined today in its paper on the proposed purchase of the manufacturing assets of Alpine MDF Industries by The Borg Group.

The ACCC’s Statement of Issues details the strong concerns voiced by a wide range of Alpine and Borg customers regarding the transaction, given the manufacturers are two of only three manufacturers of raw medium-density fibreboard (MDF) products in Australia.

“Our preliminary view is that the transaction is likely to lessen competition in national markets for the manufacture and supply of raw and value-added MDF, leading to increased prices,” ACCC Commissioner Roger Featherston said.

A key issue is the extent to which imports or potential imports of raw MDF would constrain the remaining two local manufacturers.

“Customers have raised strong concerns about the costs and other potential issues associated with trying to import raw MDF and ‘value-added MDF’ products such as doorskins and mouldings. Our understanding is that currently there is very little importation of these products into Australia.”

Manufacturers of value-added MDF products, which compete with Borg, are also very concerned that the proposed acquisition will increase Borg’s ability to raise their costs of production or foreclose their access to raw MDF. Among value-added MDF products, market participants have also raised concerns that Borg and Alpine are the only manufacturers of doorskins in Australia.

“MDF is a ubiquitous material found in the vast majority of Australian homes and commercial premises. We’re looking very closely at this transaction and its potential impacts on competition and on prices for both raw and value-added MDF products,” said Mr Featherston.

The ACCC invites further submissions from interested parties in response to the Statement of Issues by 21 July 2016. The ACCC expects to announce its final decision on 1 September 2016.

Further information on the ACCC’s merger review is available at the ACCC’s Public Mergers Register.

Notes to editors:

Borg refers to The Borg Group and Alpine refers to Alpine MDF Industries Pty Ltd which is wholly-owned by Sumitomo Forestry Corporation of Japan.

 

Release number: 
MR 120/16
ACCC Infocentre: 

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