Rivalry thanks to us, says Visy

By PAM GRAHAM

Australian packaging company Visy has increased competition in the New Zealand corrugated box market being probed by the Commerce Commission, a spokesman claims.

Tony Gray made the comments three days after the company's offices were raided (along with Carter Holt Harvey's) and also said that since Visy's arrival prices of corrugated boxes had fallen more than 25 per cent in New Zealand.

Visy now had about 30 per cent of the local market, from zero eight years ago, said Gray.

Its Auckland offices were raided on Friday, the 70th birthday of billionaire founder Richard Pratt, with documents and computers being taken away.

Visy, CHH and Amcor dominate the local corrugated box market and all say they are co-operating with the investigation.

CHH has about 36 per cent of the market and Amcor has the rest.

The Australian corrugated box market was this month thrust into the spotlight by the resignation of Amcor managing director Russell Jones and Australasian manager Peter Sutton after the company said it might have been involved in conduct which breached competition law.

Analysts agreed with Visy that competition had increased in the New Zealand market since the company arrived eight years ago.

They also said they would be surprised if the commission found evidence of anti-competitive behaviour in New Zealand.

Publicly available information suggested that any improvement in margins in the sector had been from cost-cutting, not from price increases boosting profits.

In Australia, Amcor and Visy have more than 90 per cent of the market and CHH about 3 per cent.

The analysts said the furore in Australia could play into CHH's hands because it would like to expand into packaging there. An obvious way to do that would be to buy Amcor's corrugated box business if it became available.

CHH could supply linerboard from its own pulp-and-paper mills.

At the moment, Amcor buys paper from Australian company Paperlinx and analysts said the contract would run until 2010.

Carter Holt has $1.4 billion of its $5.9 billion worth of assets in Australia and that ratio will increase when it sells forests in New Zealand.

* Yesterday, Amcor said it had bought a 16.7 per cent stake in China cigarette packager Vision Grande for $37.4 million, boosting its presence in China.