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Dairy Industry "Mega-Merger" Application Lodged

Dairy Board and nine companies apply for authorisation of "mega-merger"

Media Release 1999/73

The Commerce Commission has received an application for authorisation of a merger of the Dairy Board and nine dairy companies into one company.

Under the proposal, the new company could own all the assets of the New Zealand Dairy Board, Kaikoura Co-operative Dairy Company Limited, Kiwi Co-operative Dairies Company Limited, Marlborough Cheese Co-operative Limited, The New Zealand Co-operative Dairy Company Limited, Northland Co-operative Dairy Company Limited, South Island Dairy Co-operative Limited, Tasman Milk Products Limited, Tatua Co-operative Dairy Company Limited and Westland Co-operative Dairy Company Limited.

Commission Acting Chairman Mark Berry said that dairying is one of the biggest industries in New Zealand and the proposed merger has the potential to have a major impact on the wider economy.

"A detailed investigation will be carried out by the Commission. This will be done as openly as possible," Mr Berry said.

The application was received at 5pm yesterday. The Commission expects to make its decision by September 13 and will release a timetable for its procedure soon.

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets.

However, an acquisition that would otherwise be prohibited because of dominance concerns can still be authorised. An authorisation is granted if the Commission is satisfied that public benefits from the proposal outweigh the detriments from loss of competition.

The Commerce Act outlines the process the Commission must follow and gives 60 working days for the decision to be made.

The Commission will investigate the application and publish a draft determination giving a preliminary decision as to whether it would or would not authorise the application. Interested parties can make submissions on the draft determination and a conference may also be held.

The Commission draws together the information from its investigation, the submissions and the conference to make its final decision.

Background

Relevant documents available from the Commission include:

* The application. The applicants have stated that some information in their application is commercially sensitive and have asked for it to be treated as confidential. The Commission is considering this request. A public version will be available in due course.
* Business Acquisitions Guidelines
* Conference procedures
* Guidelines to the Analysis of Public Benefits and Detriments

ENDS

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