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Commerce Commission considering divestment

22 July 2004

Commerce Commission considering divestment undertaking from Gallagher

The Commerce Commission has received a divestment undertaking relating to Gallagher Holdings Limited's application for clearance to acquire Tru-Test Corporation.

Gallagher has agreed to divest the PEL brand, associated with electric fencing.
The proposed divestment is likely to include:

- the PEL brand for use in the New Zealand market;
- supply contracts with rural resellers;
- free access to all intellectual property; and
- plant and equipment.

Gallagher has offered the divestment undertaking with the intention of reducing the market share that Gallagher and Tru-Test would have if they were to merge. Gallagher also considers that the proposed divestment would introduce an additional constraint on the merged entity post-acquisition, in order to prevent the proposed merger resulting in a substantial lessening of competition in the electric fencing market.

The Commission has commenced further consultation with industry participants, including Gallagher and Tru-Test, their competitors, suppliers and potential entrants to the market. This consultation will assist the Commission in assessing whether the acquisition, including the divestment undertaking, is likely to have the effect of substantially lessening competition in a market.

An extension of time has been agreed with the parties to allow for this consultation, with the Commission's decision is now due on 19 August 2004.

A public version of the divestment undertaking will shortly be available on the Commission's website under adjudication.

Background

The Commission is able to accept undertakings pursuant to s 69A of the Commerce Act which states:

"In giving a clearance or granting an authorisation under section 66 or section 67 of this Act, the Commission may accept a written undertaking given by or on behalf of the person who gave a notice under section 66(1) or section 67(1) of this Act, as the case may be, to dispose of assets or shares specified in the undertaking."

The Commission is able to accept such undertakings at any stage during the clearance application process.

ENDS


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