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Commission clears Burns Philp to acquire Goodman

Commerce Act: Commission clears Burns Philp to acquire Goodman Fielder

The Commerce Commission has cleared Burns Philp & Company Limited to acquire up to 100% of the share capital of Goodman Fielder Limited subject to a divestment of the New Zealand yeast business of New Zealand Food Industries Limited (NZFI).

Commission Deputy Chair Paula Rebstock said the Commission is satisfied that the proposed acquisition would not have, nor would be likely to have, the effect of substantially lessening competition in the markets considered in this application.

"In assessing the application, the Commission looked at three markets where there was potential for aggregation or an anti-competitive effect resulting from the merger," Ms Rebstock said.

"These markets are: * the market for the supply of yellow spreads (margarine, butter, and mixes of the two); * the market for the supply of yeast; and * the packaged bread market."

"The Commission determined that in the yellow spreads market, while there will be significant aggregation in the market, there will be strong constraints placed on the merged entity by imports and competitors such as Fonterra and Unilever. The Commission also considers the two supermarket chains have countervailing power to prevent anti-competitive behaviour."

"Analysis of the markets for the supply of yeast and bread was complex due to the level of vertical integration that the merger will cause, between the yeast supplied by NZFI and the purchase of this yeast by the biggest bread producer in New Zealand, Goodman Fielder," she added.

"The Commission looked at whether this vertical integration would discourage likely entrants from entering the yeast market. Burns Philp has undertaken to divest the New Zealand yeast business of NZFI (conditional on successful completion of the Goodman Fielder acquisition), in order to avoid any vertical integration issues."

The Commission's written decision on the application will be available soon on the Commission's website, < >, select Adjudication.

Background Burns Philp is an international manufacturer and supplier of yeast, other bakery ingredients, and herbs and spices. It supplies both branded consumer products and industrial food ingredients. Although based in Australia, it operates in New Zealand through its subsidiary NZ Food Industries Ltd. NZ Food Industries supplies most of New Zealand's bakers yeast. Burns Philp's major shareholder is Rank Group Ltd, which through its subsidiary NZ Dairy Foods Ltd supplies Anchor, Fernleaf dairy products and margarines together with other dairy products.

Goodman Fielder is an Australian based branded food company with operations in Australia, New Zealand and the Asia-Pacific region. In New Zealand, Goodman Fielder supplies the following well known supermarket brands: * bread and bakery products (eg Quality Bakers, Vogel's, Freya's, Ernest Adams); * margarine (eg Meadow Lea) * edible oils (eg Gold "N" Canola); and * cereals and snacks (eg Uncle Toby's, and Bluebird).

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