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Commission clears Portacom Portable Buildings buy


Media Release

Issued 2 November 2000/108

Commission clears Portacom to acquire Portable Buildings

The Commerce Commission today cleared Portacom New Zealand Limited to acquire all the assets of Portable Buildings Limited.

Both companies manufacture portable buildings for hire and sale, with Portacom operating nation-wide and Portable Buildings operating mainly in the South Island. Canterbury was the only region in the South Island where substantial aggregation would occur.

Commission Deputy Chairman Mark Berry said that the Commission was satisfied that, should the proposal go ahead, Portacom would not acquire or strengthen a dominant position in the market for manufacture and delivery of portable buildings for sale or hire in Canterbury.

If the proposal goes ahead, then Portacom would have a large market share in Canterbury-outside the safe harbours described in the Commission's Business Acquisitions Guidelines.

However, the Commission is satisfied that existing competitors could readily expand to meet demand if Portacom increased prices or reduced services. The Commission was also able to identify several potential competitors that could quickly enter the market.

Users of Portacom's portable buildings have stated that they would be comfortable switching to a new supplier or subcontracting a firm to build portable buildings, should prices rise unreasonably.

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

Parties can apply for a clearance, which the Commission will give if it is satisfied that dominance is not acquired or strengthened.

The guidelines the Commission has published state that acquisitions resulting in market share of up to 40 percent, or up to 60 percent if another competitor has 15 percent, are unlikely to result in dominance.

Where an acquisition results in market shares outside these safe harbours, then the Commission looks at other competition issues, including the ability of competitors to expand, the likelihood of new entry to the market and the countervailing power of buyers.

Media contact: Senior Advisor Communications Vincent Cholewa Phone work (04) 498 0920, home (04) 473 3827

Commission media releases can be viewed on its web site www.comcom.govt.nz


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