Commission declines Gallagher Holdings application

Commission declines application by Gallagher Holdings to acquire Tru-Test Corporation

The Commerce Commission has declined to grant clearance to Gallagher Holdings Limited to acquire 100 percent of the shares of Tru-Test Corporation Limited.

Chair Paula Rebstock said that the Commission was not satisfied that the proposed acquisition would not have, or would not be likely to have, the effect of substantially lessening competition in the national market for the manufacture and wholesale supply of rural and security electric fencing products.

The clearance application from Gallagher included a divestment undertaking whereby Gallagher offered to divest the PEL brand, a rural electric fencing brand owned by Tru-Test. Gallagher had offered the divestment undertaking with the intention of reducing the market share that Gallagher and Tru-Test would have if they were to merge.

Ms Rebstock said that the Commission considered that post acquisition, the combined entity would have a large proportion of the market and would not be sufficiently constrained by the divested PEL brand or other small competitors.

“In addition, the Commission found that high barriers to expansion and entry would hinder a divested PEL’s or other existing competitors’ expansion, or any new company’s entry. These high barriers would mean it would be unlikely for there to be sufficient constraint to prevent the combined entity from exercising market power, by raising prices or reducing the quality of its service.

“Overall, the Commission considered that the acquisition would result in a substantial lessening of competition in the national market for the manufacture and wholesale supply of rural and security electric fencing products,” said Ms Rebstock.

A public version of the Commission’s decision will shortly be available on the Commission’s website under Adjudication: http://www.comcom.govt.nz/adjudication/s6667.cfm.

Background

The Gallagher Group is headquartered in Hamilton and comprises a number of companies with a primary focus on the design, manufacture and marketing of animal and security management systems in New Zealand . Gallagher’s key products include: rural and industrial fencing products; animal weighing systems; contract manufacturing products; security access control products; and fuel dispensing products.

Tru-Test is headquartered in Auckland , and designs, manufactures and markets agritech solutions.

Tru-Test’s key products include: rural and industrial fencing products; animal weighing systems; contract manufacturing products; milk metering equipment; shearing products; and brain monitoring equipment.

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