Oji to Acquire Carter Holt Harvey Pulp and Paper
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The Commerce Commission, New Zealand, has given clearance for Oji Oceania Management (NZ) Ltd. (Oji) to acquire up to 100% of the shares in Carter Holt Harvey Pulp & Paper Ltd. from Carter Holt Harvey Ltd., Australia. Through its ownership links with Pan Pac Forest Products Ltd., Oji owns forests, a saw mill, and a pulp mill in Hawke’s Bay. As a result of the acquisition, Oji will own Carter Holt Harvey’s pulp and paper business, which includes the Kinleith pulp and paper mill, and the Tasman pulp mill in the central North Island.
"The Commission is satisfied that the merger will not have, or would not be likely to have, the effect of substantially lessening competition in any of the affected markets," said Commerce Commission Chairman Dr. Mark Berry.
"Oji’s mechanical pulp mill and Carter Holt Harvey’s kraft pulp mills produce different types of pulp, so the merger is unlikely to result in any change to the competitive situation in respect of the supply of pulp," said Dr. Berry.
The Commission also considered the impact of the merger on the markets in which Oji and Carter Holt Harvey buy pulp logs and wood chips; the principal inputs used in their pulp mills. The Commission identified that some pulp log and wood chip suppliers that currently supply Oji or Carter Holt Harvey could lose a competing buyer as a result of the merger. The Commission therefore considered whether Oji would be able to depress the prices it pays to those suppliers to such an extent that the suppliers might reduce the quantity of pulp logs that they produce.
"However, the Commission considers that as pulp logs are a by-product of saw logs, the quantity of pulp logs produced is driven largely by the price of saw logs. As such, the merger is unlikely to result in any reduction in the quantity of pulp logs produced," said Dr. Berry.
"While the removal of a potential competing buyer for wood chips may lead to a decrease in the prices Oji pays affected suppliers, it is unlikely to lead to a reduction in wood chip output because Oji requires the chips from all of its suppliers to enable its pulp mill to run at capacity," Dr. Berry added.
