The ACCC has decided to grant authorisation* to enable businesses that acquire unprocessed timber logs from the South Australian Forestry Corporation (ForestrySA) to form a collective bargaining group to negotiate the terms and conditions of supply agreements for logs from the Mount Lofty Ranges in South Australia until 30 June 2032. In particular, the authorisation allows the collective bargaining group to discuss:
- prices per grade of log
- period of supply
- log volumes
- delivery and collection locations
- log specifications
- the rate at which logs would be collected (m3 or tonnes per week)
- incidental matters (e.g. when fire affected logs would be rejected, measurement methodology, insurance requirements, payment terms, security).
Participation in the collective bargaining group will not prevent businesses from also pursuing individual supply contracts with ForestrySA. ForestrySA will not be compelled to engage in collective bargaining or accept any offer put to it by the collective bargaining group or any of its individual members.
The collective bargaining group would initially comprise of Morgan Sawmill Jamestown, KSI Sawmill, PalletCo SA, SA Pine and Harvestco, but could extend to further businesses in the future. Authorisation was granted with a condition requiring that the ACCC be notified at least 30 days in advance of any further businesses joining the group.
The ACCC considers that with this condition, the proposed collective bargaining is likely to result in public benefits including transaction cost savings, improved efficiency for businesses in the Buying Group, and increased domestic log processing. It is also likely to lead to lower input costs for businesses in the Buying Group, and result in lower prices for finished timber products for end consumers.
The ACCC considers the proposed collective bargaining activities are likely to lead to some reduction in competition to acquire unprocessed timber logs from the Mount Lofty Ranges. However, there are a number of factors which means this reduction in competition in not likely to result in public detriment.
Further information about the ACCC's decision is available on the ACCC's public register at: Morgan Sawmill Jamestown.
*Authorisation provides businesses with legal protection for arrangements that may otherwise risk breaching the law but are not harmful to competition and/or are likely to result in overall public benefits.