Newsprint Merger Go-ahead

Filed under Legal, Manufacturing, Media, News ~ by Press on  20 Feb 2020

The ACCC will not oppose the proposed acquisition of Direct Paper by Spicers Limited.

The commission ruled that finding that alternative suppliers of commercial printing paper and direct supply arrangements between printers and paper mills will continue to provide strong competition and constrain paper prices.

Direct Paper and Spicers are both engaged in the wholesale supply of commercial printing paper which is predominantly sold to commercial printers in Sydney, Melbourne and Brisbane.

We have looked very closely at this proposed transaction, because it combines two of the larger paper merchants in these cities. However, we decided not to oppose this deal because we considered that rival merchants will continue to provide strong competition.

Smaller customers generally have several alternative sources of supply, and larger customers can also import paper directly from paper mills,” ACCC Commissioner Stephen Ridgeway said.

In Sydney and Melbourne, the ACCC found that the parties would continue to face competition from a number of paper merchants with supply warehouses in those cities including Ball & Doggett, Vital and Domain.

In Brisbane the ACCC found that barriers to expansion were low and printers were willing to support alternative suppliers, providing the opportunity for smaller paper merchants to enter or expand. Furthermore, existing paper merchants were likely to be constrained by the growing prospect of printers switching to direct supply from overseas mills as an alternative source for at least some of their supply.

We found that many printers in Sydney and Melbourne were comfortable with alternative suppliers, such as Ball & Doggett, Domain and Vital.

In Brisbane, where there are fewer competitors, we found that others are likely to expand or enter the market post-acquisition if prices rise, as barriers to expansion in Brisbane are unlikely to be significant. Direct Paper itself expanded into Brisbane in 2017,” Mr. Ridgeway said.

Taking into account the collective impact of these factors, the ACCC decided not to oppose the proposed acquisition of Direct Paper by Spicers.

Spicers Limited is a wholesale supplier of a range of paper, packaging and sign and display products in Australia and New Zealand.

Spicers is part of the wider Kokusai Pulp & Paper Co Ltd (KPP) group which is a Japanese multinational company operating as a trading house. KPP operations include the importing/exporting of paper board, pulp and other paper related products which KPP acquires from paper mills.

Spicers operates warehouse facilities in Dandenong South, Chullora and Hendra.

Direct Paper is a family owned wholesaler supplier of a range of paper and packaging products. In addition to wholesale supply of standard and pre-formed products, Direct Paper can also produce custom dimensions for packaging and board products.

Direct Paper operates warehouse facilities in Dingley and Springvale, Ermington and Pinkenba.

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