Commission completes investigation into Fletcher's purchase of cutting rights
Published21 Aug 1996
The Commerce Commission said today it had investigated Fletcher Challenge Ltd's involvement in the consortium that the Government has accepted as the buyer of the Forestry Corporation.
The Commission was responding to a request from Alliance Leader Jim Anderton that it investigate the proposed acquisition.
Commission Chairman Dr Alan Bollard said that the Commission had previously investigated the possibility of a Fletcher Challenge bid and concluded it would not result in dominance in any market.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened. Courts have consistently held that dominance is a measure of market power and imposes a high test. A firm with a dominant position in a market must be in a position to exercise a high degree of market control, and to be able to set prices or conditions without significant constraint from possible response from competitors or customers.
The Commission found that a merged Fletcher/Forestry Corp would have less than 30 percent of the market for sawn timber, less than 40 percent of the market for wood chips and less than 50 percent for logs.
Alternative Suppliers, including Carter Holt Harvey, would continue to provide significant competition in all these markets, and barriers to entry for new competitors would not change.
Media contact: Communications Officer Vincent Cholewa
