The Australian Competition and Consumer Commission today announced it will not oppose the proposed acquisition of the Bell Bay sawmill business of Forest Enterprises Australia Limited (Receivers and Managers appointed) (Administrators appointed) by Gunns Limited.
Gunns operates a softwood sawmill at nearby Scottsdale, Tasmania, which also acquires softwood sawlog and manufactures and supplies structural and appearance grade softwood timber products.
On 18 October 2010 Gunns publicly announced its decision to close the Scottsdale sawmill regardless of whether or not it was successful in acquiring the Bell Bay sawmill business. Gunns has assessed the softwood sawlog volume available to the Scottsdale mill as unviable and unsustainable.
This is consistent with the ACCC's extensive inquiries with softwood sawn timber producers, key customers and suppliers, government bodies and industry associations. These inquiries indicated that the available volume of softwood sawlog was significantly less than the total installed softwood sawmilling capacity in Tasmania and was expected to decline further in the foreseeable future. The ACCC's inquiries also indicated that supplementing local sawlog with sawlog supplied from interstate was not a viable option to support the efficient operation of sawmills in Tasmania.
"The ACCC therefore concluded that the volume of available softwood sawlog was likely to be sufficient to support the continued viability of only one major Tasmanian softwood sawmill operator on a commercial basis," ACCC chairman Graeme Samuel said. "Accordingly, the proposed acquisition is unlikely to substantially lessen competition in any market."
On 14 April 2010 the non-plantation assets of Forest Enterprises Australia Limited (Receivers and Managers appointed) (Administrators appointed), including the Bell Bay sawmill, were placed into receivership, with Deloitte Touche Tohmatsu (Deloitte) appointed as receivers and managers. The Bell Bay sawmill business was offered for sale by way of a competitive bidding process. Gunns has agreed with Deloitte to acquire the Bell Bay sawmill business conditional on ACCC clearance.
The Bell Bay sawmill was commissioned in March 2008 and is located in north-eastern Tasmania. The business acquires softwood sawlog from plantations and farmers for the manufacture of structural and appearance grade softwood timber products that are supplied in Tasmania and interstate.
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.