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James Hardie cleared to acquire Long International

Media Release

Issued 18 December 2000/136

Commission clears James Hardie to acquire Long International

On Friday the Commerce Commission cleared James Hardie NZ Ltd to acquire all the assets of Long International Ltd.

Both companies manufacture polystyrene and polystyrene insulated panels used for building cold stores and other controlled temperature buildings. James Hardie has factories in Auckland and Christchurch and Long International in Christchurch.

Commission Chairman John Belgrave said that the Commission was satisfied that, should the proposal go ahead, James Hardie would not acquire or strengthen a dominant position in either the South Island market for the manufacture of polystyrene blocks and sheets, or the South Island market for the manufacture of polystyrene insulated panels for use in controlled temperature buildings.

If the proposal goes ahead, James Hardie will acquire a large market share in Canterbury in both markets-outside the safe harbours described in the Commission's Business Acquisitions Guidelines.

However, the Commission is satisfied that barriers to the entry of new competitors into both markets are particularly low. The Commission was also able to identify several potential competitors that would be able to quickly enter the markets should James Hardie raise its prices in the South Island. The Commission also noted that there is a history of successful entry into the equivalent markets in the North Island. The Commission considers that this potential for entry will constrain James Hardies prices.

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: Commerce Act Manager Geoff Thorn Phone work (04) 498 0958,

Senior Advisor Communications Vincent Cholewa Phone work (04) 498 0920,

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

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