Commission Declines To Clear Merger

Commission Declines To Clear Merger Of Two Of South Island's Major Carbon Dioxide Distribution Businesses

The Commerce Commission has declined to clear the merger of the wholesale supply and distribution businesses of two of the major carbon dioxide distributors in New Zealand.

BOC Gases New Zealand Limited had applied for clearance of a proposal that included it acquiring ASCO Carbon Dioxide Limited's carbon dioxide distribution assets. Air Liquide New Zealand Limited is the only other distributor of carbon dioxide in the South Island.

The proposal also included restraint of trade, purchasing and distribution agreements between BOC and ASCO.

Commission Chair John Belgrave said that the Commission was concerned about dominance in the South Island market for the wholesale supply and distribution of carbon dioxide.

"In all of the South Island, except for Marlborough, the only competition is between BOC and ASCO," Mr Belgrave said. "It is the Commission's view that new entry to this market is not likely nor sustainable. A new entrant would not be able to obtain a large enough supply of carbon dioxide at a competitive price to offer effective constraint if the proposal went ahead."

"For these reasons we were not satisfied that BOC would not acquire or strengthen dominance in the South Island market if the proposal went ahead."

Background

When parties apply for clearance of a business acquisition, the Commission must determine what markets are relevant to the proposal, and then assess what impact the proposal would have on competition in those markets.

The Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market. The Commission will decline a clearance if it is not satisfied that dominance would not be acquired or strengthened.

Public copies of the Commission's decision will soon be available from its website, www.comcom.govt.nz, and in hard copy from reception at its Wellington office, level 7 Landcorp House, 101 Lambton Quay.

Media contact: Commerce Act Manager Geoff Thorn Phone work (04) 498 0958, cellphone 021 661 104

Senior Advisor Communications Vincent Cholewa Phone work (04) 498 0920, home (04) 477 0039

Commission media releases can be viewed on its web site www.comcom.govt.nz

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