Commission opens investigation into wool scouring

Commission opens investigation into wool scouring acquisition

The Commerce Commission has opened an investigation into David Ferrier’s acquisition through a holding company of a 70% equity interest in wool scourer Cavalier Wool Holdings Limited.

The Commission will consider whether the acquisition would be likely to substantially lessen competition in any relevant market in breach of section 47 of the Commerce Act.

Mr Ferrier did not apply for clearance for the acquisition, which occurred on 28 September 2018.

Mr Ferrier also owns 100% of New Zealand Wool Dumping Limited. Wool dumping is the compression of wool bales into a smaller package size so that more bales can fit into a shipping container for export.

The focus of the investigation will be on the extent to which wool dumping and wool scouring constrain each other and whether the merger would enable the owner of New Zealand’s only wool dumping operation and majority owner of New Zealand’s only scouring business to raise prices or lower the quality of either of those services.

The Commission invites parties who consider they hold relevant information to contact the Commission by email to registrar@comcom.govt.nz with the reference David Ferrier/Cavalier Wool Holdings in the subject line no later than 4pm Friday 26 October 2018.

Background
Section 47 of the Commerce Act prohibits acquisitions that are likely to substantially lessen competition. The Commission administers a voluntary notification regime that allows firms to apply for clearance if they consider their planned acquisition could raise competition issues. If firms do not apply for clearance, the Commission can initiate an investigation into a proposed or completed acquisition under section 47. If a person breaches section 47 they may be subject to a penalty of up to $500,000 for an individual or $5 million for a firm.

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