The Australian Competition and Consumer Commission today announced that it intends to oppose the proposed acquisition of ITC Timber Pty Ltd by Gunns Limited.
"In particular, the ACCC concluded 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," ACCC chairman Graeme Samuel said today.
"The ACCC conducted extensive inquiries with a range of parties, including alternative producers of hardwood sawn timber products and wood chips, key customers, suppliers of hardwood sawlog, pulpwood and residual timber, government bodies and industry associations," Mr Samuel added.
"These inquiries indicated that suppliers of hardwood pulpwood in north-eastern Tasmania, in particular farmers and private plantation owners, would face lower prices for their timber if the proposed acquisition were allowed to proceed. The proposed acquisition would reduce the number of significant independent acquirers of hardwood pulpwood in the region from three to two, with the remaining competitor to the merged firm unlikely to provide an effective competitive constraint."
With little likelihood of new entry into the manufacture of wood chips in the foreseeable future, the ACCC concluded that the proposed acquisition was likely to substantially lessen competition in this market.
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.
The basis upon which the ACCC has reached its decision will be outlined in a Public Competition Assessment, available shortly on the ACCC's website, www.accc.gov.au, refer to: Public Competition Assessments.