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Quigley Report Conclusions Endorsed

Media Release From The New Zealand Business Roundtable

The New Zealand Business Roundtable has endorsed the conclusions of the report on the proposed dairy industry merger by Professor Neil Quigley of Victoria University of Wellington and called on the government to insist that the proposal is subject to Commerce Commission scrutiny.

"The Quigley report raises major issues about competition in relevant markets", Roger Kerr, NZBR executive director, said today. "These include not just the supply of milk products to the domestic consumer market but, importantly, the market for the purchasing and processing of raw milk.

"As the Quigley report notes, features of the current proposal such as the basis on which Dairy Foods would be set up, the absence of price unbundling and tradeable shares, quota rights and exit and entry arrangements could constitute serious barriers to effective competition. This would be to the
detriment of the community at large, as the industry would not be making the greatest possible contribution to national income.

"The argument that the merger proposal should be allowed to escape Commerce Commission scrutiny because most dairy production is exported is simply wrong", Mr Kerr said.

"There would be a justified outcry if, say, two major forestry exporting companies sought exemption from normal competition law on this basis. At stake are not just the interests of those currently in the industry but future participants and the wider community. These will be badly served if all relevant markets in the dairy industry are not open to competition so that the greatest value is obtained from the resources it uses.

"The Commerce Act is a perfectly satisfactory framework for assessing these issues", Mr Kerr concluded. "There must be one law for all industries, not privileged treatment for some. At a time when the government is promoting proposals which it believes would strengthen the Commerce Act, it would be totally inconsistent to exclude from its disciplines one of New Zealand's largest industries. We urge the government to ensure that due process is followed".


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