Commission declines to clear Weyerhaeuser to acquire CHH's Nelson forests
Published19 Feb 1999
The Commerce Commission today declined to clear RII Weyerhaeuser World Timberfund LP to acquire the Nelson forestry assets of Carter Holt Harvey Limited (CHH).
Commission Chairman Peter Allport said that the Commission was not satisfied that Weyerhaeuser would not acquire or strengthen a dominant position in the market for the supply of logs in Nelson/Marlborough.
RII Weyerhaeuser's managing partner, Weyerhaeuser Company of Washington State USA, already owns 51 percent of an existing 64,000 hectare forestry operation in Nelson/Marlborough. The application declined by the Commission included RII Weyerhaeuser acquiring 28,000 hectares of forest, a nursery, buildings, fire fighting equipment and office equipment from CHH.
The Commission found that, should the acquisition go ahead, Weyerhaeuser Company would own a high percentage of the radiata pine forests aged over 20 years in the Nelson/Marlborough area and this would be outside the Commission's "safe harbours".
The safe harbours are published in Business Acquisitions Guidelines and are 40 percent market share or 60 percent if at least one competitor has 15 percent or more of the market.
The Commission concluded that with the high percentage of ownership of mature trees that would result from the proposal, it was not satisfied that dominance would not result in any market.
Background
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply for clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened.
A clearance, if granted, protects an acquisition from court action under the Act.
Public copies of the Commission's decision are available from reception at its Wellington office, level 7, Landcorp House, 101 Lambton Quay. They will be on its website, www.comcom.govt.nz, on Monday.
