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Fletcher Building to acquire Waikato Aggregates

Commission grants clearance for Fletcher Building to acquire Waikato Aggregates
The Commerce Commission has granted clearance for Fletcher Building Limited to acquire the business of Waikato Aggregates, except for the land at Tamahere quarry.

Waikato Aggregates is a supplier of concrete sand in the Waikato and Bay of Plenty regions, while Fletcher Building mainly purchases concrete sand to manufacture and supply ready-mix concrete and concrete masonry products.

In making its decision, the Commission primarily focused on the impact of the acquisition on the markets for the supply of concrete sand, ready-mix concrete and concrete masonry products in the Waikato region.

Chairman Dr Mark Berry said the Commission was satisfied that the acquisition would be unlikely to substantially lessen competition in the Waikato region.

“We consider the presence of other suppliers in the region will ensure Fletcher Building is unable to prevent competitors in the ready-mix concrete and concrete masonry markets from obtaining supply of concrete sand,” Dr Berry said.

“Attempting to limit the supply of concrete sand to downstream competitors would likely risk them switching to other suppliers and there is sufficient spare capacity in the market for them to do so.”

The Commission also concluded that Fletcher Building’s existing sand quarry in Pukekawa did not compete closely with Waikato Aggregates due to the distance between them.

A public version of the written reasons for the decision will be available on the case register in the near future.

Background

Fletcher Building is a limited liability company listed on the New Zealand Stock Exchange and the Australian Securities Exchange. Fletcher Building operates in various parts of the construction industry and its business can be segmented into building products, laminates and panels, plasterboard, steel, concrete, residential and development, and construction.

Waikato Aggregates is a privately-owned company which owns and operates a sand quarry at Tamahere, located just south of Hamilton. The Tamahere quarry extracts and processes sand, along with a small amount of other aggregates such as pebbles and stones.

Fletcher Building has not purchased the underlying land at Tamahere quarry as part of this acquisition. It has purchased all other assets of the Waikato Aggregate business, including the right to extract and sell sand from the site for a 15-year period before the land is rehabilitated and returned to Waikato Aggregates.

Merger clearance processThe Commission will give clearance to a proposed merger if it is satisfied that it would be unlikely to have the effect of substantially lessening competition in any market in New Zealand. Further information explaining how the Commission assesses a merger application is available on ourwebsite.

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