PaperlinX Cleared To Acquire Spicers Paper

Issued 20 December 2000

Commission Clears PaperlinX To Acquire Spicers Paper

The Commerce Commission today cleared PaperlinX Limited to acquire Spicers Paper Limited.

The Commission was satisfied that, should the acquisition go ahead, PaperlinX would not, and would not be likely to, acquire or strengthen a dominant position in any market in New Zealand.

The Commission investigated the proposal in the market for the importation and supply of fine paper in New Zealand.

In this market, the Commission concluded that the merged entity would have a market share marginally outside the "safe harbours" published in the Commission's Business Acquisitions Guidelines. The safe harbours are:

* 40 percent market share, and * 60 percent market share if at least one competitor has 15 percent or more of the market.

Notwithstanding the merged entity's likely market share, the Commission concluded that the presence of existing competitors and the threat of potential entry or expansion by a current competitor were likely to provide an effective constraint on the merged entity. In addition, the ability of large purchasers of fine paper to buy directly from overseas mills and import into New Zealand would provide a further constraint upon the combined entity.

Background

The Commerce Act prohibits business acquisitions that result in dominance being acquired in any market in New Zealand.

Parties can apply for a clearance, which the Commission will grant if it is satisfied that dominance is not acquired or strengthened. A clearance, if granted, protects an acquisition from court action under the Act.

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

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