Australian Paper, the only independent, non-vertically integrated, domestic supplier of certain paper packaging inputs made from kraft fibre, has been given the nod by the ACCC to acquire packaging paper manufacturer Orora Fibre.
Orora Fibre, which produces recycled packaging paper products, is a major Australian Paper customer and currently uses the company’s kraft products in the construction of sacks, bags and cardboard boxes.
The ACCC reviewed the proposed acquisition to determine the likely impact it would have on other buyers of packaging paper products. According to ACCC Commissioner Stephen Ridgeway, the key focus of the investigation was the impact of Australian Paper vertically integrating with a paper packaging manufacturer.
“We decided not to oppose this acquisition because we considered that imports and other Australasian producers of packaging paper products would continue to provide options for buyers,” he said.
Mr Ridgeway also noted that the consumer watchdog had carefully considered the market for kraft linerboard, as this is a key input for the manufacture of durable corrugated cardboard boxes.
“Although imports of kraft linerboard, used to make cardboard boxes, are currently limited we found that it is readily traded globally and is produced by several manufacturers around the world,” he explained.
“If kraft linerboard was no longer available in Australia, we think Australian purchasers would be able to import this product at competitive prices.
“We also considered that Australasian suppliers, such as Visy, Oji Fibre Solutions or Australian Paper would likely still have the incentive to continue to supply Australian customers.” Mr Ridgeway concluded.