The ACCC will not oppose the proposed acquisition of the Tasmanian forestry assets of funds managed by Resource Management Service LLC (RMS) by funds advised by Global Forest Partners LP (GFP).
Both GFP and funds managed by New Forests bid for the RMS assets. On 26 September 2019 the ACCC raised preliminary concerns with both parties’ bids.
“Our strongest concerns related to New Forests bid, particularly the impact on competition for hardwood logs from private growers in north-western Tasmania,” ACCC Commissioner Stephen Ridgeway said.
Following the release of the ACCC’s concerns, New Forests withdrew from the sale process.
“The acquisition by GFP also raised some preliminary competition concerns, but only in north-eastern Tasmania. However, after closely considering further information received from market participants, our view is that it is unlikely to substantially lessen competition,” Mr Ridgeway said.
“We had concerns the GFP acquisition could impact the viability of competing exporters of hardwood plantation chips in north-eastern Tasmania, which had the potential to lower prices paid to private growers of plantation logs.”
“After further investigation we found that there is likely to be enough supply of chipping logs from private growers to provide a third export operator with sufficient volumes to attract international buyers,” Mr Ridgeway said.
“We also found that the volumes of private plantation logs for sale should increase over the next couple of years, giving competing buyers even more scope to increase their volumes.”
Additionally, the ACCC considered that timber brokers also constrain the woodchip exporters to some extent by competing to buy logs from private plantation owners and on-selling them.
Brokers can direct certain logs to be sawed or prepared for plywood manufacturers, generally achieving higher prices for plantation owners compared to chipping them all.
Further information is available at Global Forest Partners LP – proposed acquisition of Resource Management Service LLC’s Tasmanian hardwood plantations.
RMS, GFP and New Forests are the largest private owners of hardwood plantations in Tasmania.
Resource Management Service LLC, is a global forest investment manager based in the United States. RMS does not own any processing facilities in Tasmania. Its timber is processed at third party chipping mills.
GFP is a vertically integrated forestry investment manager which manages plantations, forestry and processing infrastructure in Tasmania.
GFP controls hardwood plantations, chipping mills and markets and exports wood chips through its own export facilities.
GFP operates as adviser to a number of funds or trusts that own assets in the Australian forestry industry.
New Forests also advises funds which own hardwood plantations, chipping mills and export operations in Tasmania.
The ACCC issued a statement of issues on 26 September 2019.