The competition regulator has raised concerns with plans for a state-owned logging company to buy its competitor. 

The ACCC has outlined preliminary concerns with Forestry Corporation of New South Wales’ (FCNSW) proposed acquisition of the assets of Hume Forests Ltd (Hume) in a statement of issues published today. 

Hume is being sold in a competitive bid process. FCNSW is a state-owned corporation that manages commercial native and plantation forests on behalf of the NSW Government.

The ACCC says its market feedback indicates that FCNSW accounts for over 60 per cent of the plantation area in the Tumut/Tumbarumba region and over 75 per cent of the plantation area in the Bathurst/Oberon region, and consequently is the dominant softwood log supplier in the regions.

“We are concerned that this acquisition is likely to lead to price increases or reductions in service levels for the supply of softwood logs in the Tumut/Tumbarumba and Bathurst/Oberon regions by removing a significant competitor to FCNSW,” ACCC Deputy Chair Mick Keogh said.

“Barriers to entry and expansion are very high in the forestry industry. Market shares reflect access to land in these regions and that is unlikely to significantly change in the long term.”

“Given the nature of the industry, we are considering competition issues with a long-term time horizon of 25 years or more,” Mr Keogh said.  

“This industry is characterised by long-term contracts and infrequent tenders by plantation owners. In this context, we are carefully considering the extent to which FCNSW and Hume are likely to competitively constrain one another.”

Forestry Corporation NSW is also the subject of ongoing scrutiny over fines issued for logging operation non-compliance.