FCL firm denied State forest gain

Press, 25 February 1989, Page 29

FCL firm denied State forest gain

PA Wellington The Commerce Commission has refused clearance for Fletcher Challenge subsidiary, Tasman Forestry, to buy all of the forest assets owned by the Crown, the Commission’s deputy chairman, Mr Barrie Tucker, said yesterday. The Commission was satisfied the proposal could result in Tasman strengthening a dominant position in markets for log production in the central North Island, NelsonMarlborough and West Coast regions. •

It was not satisfied that public benefits Tasman said would arise from the proposal, were sufficient to outweigh detriments which could result from dominance, the Commission said. Of the markets in which dominance was found the central North Island accounted for around 50 per cent of all exotic forest plantation in New Zea-

land, Nelson-Marlborough around 10 per cent and West Coast around 3 per cent. These regions accounted for over 75 per cent of current log production. Logs, the Commission noted, were a product of fundamental importance to the New Zealand economy and lifestyle. Mr Tucker emphasised that although this proposal had been turned down, this did not mean Tasman could not buy Crown forests. Tasman could apply for clearance for particular portions of forests in geographic markets where dominance had been found or for forests where competition is unlikely to arise. Mr Tucker said that, after concern about log supply to independent downstream processors, Tasman had offered to provide certain undertakings about future log supply and about the felling

of indigenous forests. The Commission was not told of the precise nature of these proposed undertakings until the day after the conference on the Tasman proposal. In the event the Commission found itself unable to authorise the proposal and the undertakings had therefore not become a central feature. Undertakings could, however, be relevant in future applications if they were proffered as part of the company’s proposal, Mr Tucker said. Any undertakings relating to the future behaviour of a merged entity would be considered on their merits, although the Commission would view such undertakings with considerable caution. Given the detailed and lengthy investigation into the current proposal, Mr Tucker said, it was hoped that any future application by Tasman could be dealt with expeditiously.