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Commission Clears Milburn To Acquire Supplier

Commission Clears Milburn New Zealand Limited To Acquire Ready-Mix Concrete Supplier

The Commerce Commission has cleared Milburn New Zealand Limited, to acquire ready-mixed concrete supplier, Isaac Concrete Limited, which is a subsidiary of the Isaac Construction Company Limited.

Deputy Chairman, Mark Berry, said that the Commission was satisfied that, should the proposal go ahead, no party would acquire or strengthen a dominant position in the Nelson, Christchurch, Timaru or Dunedin markets for the manufacture and supply of ready-mixed concrete. The Commission was also satisfied that no dominance would be acquired or strengthened in the national market for the manufacture and wholesale supply of cement.

Milburn is involved in the manufacture, sale and transportation of cement throughout New Zealand. It also has its own ready-mixed concrete division, Ready Mix Concrete, and is interconnected with two other ready-mixed concrete suppliers, Allied Milburn Limited and Allied Concrete Limited.

Isaac Concrete is involved in the manufacture and sale of ready-mixed concrete from its concrete plants in Nelson, Christchurch, Timaru and Dunedin. It also operates a ball mill at its Christchurch premises which it uses to grind cement clinker into cement for its own use.

If the proposed acquisition were to proceed, market aggregation would arise in each of the four geographically separate ready-mixed concrete markets.

The Commission was satisfied that in each of these ready-mixed concrete markets, sufficient competitive constraint would exist from other market participants to prevent a combined Milburn/Allied Milburn/Allied Concrete/Isaac Concrete from increasing prices above a competitive level, or reducing service or quality. Firth Industries Limited supplies ready-mixed concrete in all the relevant markets. In the Christchurch market, another significant competitor is present, Christchurch Ready-Mix Concrete Limited.

As there would be no aggregation concerns in the national market for the manufacture and wholesale supply of cement, no dominance issues would arise in that market.

Background

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market.

Parties can apply for a clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened.

A clearance, if granted, protects an acquisition from court action under the Act.


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