JV Cleared To Acquire Wool Assets from Merino NZ

Media Release

Issued 7 June 2001/68

Commission clears joint venture to acquire wool assets from Merino NZ and Wrightson

The Commerce Commission today cleared a yet to be formed joint venture company, currently known as "NewCo", to acquire specified merino wool assets from Merino New Zealand Limited and Wrightson Limited.

Commission Chair John Belgrave said that the clearance is for NewCo to acquire the specified assets only. It does not give protection to any licensing, supply or other agreements among the companies. All agreements among the companies are still subject to the Commerce Act.

NewCo was given clearance to acquire Wrightson's business assets relating to buying and selling merino fine wool fibre. It was also cleared to acquire the assets related to Merino New Zealand's national and international marketing of merino fine wool fibre.

Mr Belgrave said that the Commission was satisfied that the proposed acquisition would result in no aggregation of market share in any of the New Zealand markets for: * merino wool auction services * direct purchase of merino wool, and * national and international promotion of merino wool and contract facilitation.

NewCo would acquire Wrightson's market shares in the auction and the direct contract markets. Merino New Zealand does not operate in these markets so the acquisition would result in no aggregation of market share.

Likewise, in the promotion market the effect is a change of ownership with no aggregation of market share. NewCo would acquire assets from Merino New Zealand, with no material change to the market situation.

NewCo would continue to face effective competition in the affected markets from various parties, including other brokers and wool exporters.

"For these reasons, the Commission is satisfied that NewCo would not acquire or strengthen dominance in any of the three relevant markets," Mr Belgrave said.

Public copies of the Commission's decision will be available next week.

Background

The application was made on behalf of NewCo before amendments to the Commerce Act took effect on May 26. At that time the Act prohibited business acquisitions that resulted in dominance being acquired or strengthened in any market. The amended Act prohibits business acquisitions that substantially lessen competition in any market.

The Commission must use the dominance test when it investigates applications made before May 26 and the substantial lessening test when it investigates applications made on or after May 26.

ENDS

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