The Commerce Commission has published its reasons for granting clearance to Fletcher Building Limited to acquire up to 100 per cent of the assets of both Stevenson Group Limited's Whangarei masonry business and Stevenson's Auckland masonry business.

A public version of the reasons can be viewed on the Commission's website www.comcom.govt.nz under the Clearances Register Clearance was given on 13 February 2009.

Deborah Battell, Commerce Commission Director of Competition, said that Stevenson was experiencing sustained and substantial losses in respect of its masonry business, despite efforts having been made to turn the business around. Stevenson's Board of Directors had made a formal decision to exit (either by sale or closure). The Commission considered that there was a real and substantial prospect that the closure by Stevenson of its masonry business was imminent, absent a sale to another party.

In assessing whether the proposed acquisition was likely to substantially lessen competition, the Commission considered whether, if the proposed acquisition did not proceed, there was a real prospect of a third party acquiring the business as a going concern, or acquiring the assets on closure of the business and using them to compete in the relevant markets (in both cases at a price exceeding Stevenson's closure value).

Ms Battell said, "The Commission was satisfied that there was no real prospect of either of these scenarios occurring." From its investigation, the Commission was unable to establish that there were any serious, credible alternative offers for the business either as a going concern or for its assets in the time available before closure of the business.

What the Commission saw was mere interest from many parties rather than substantial steps taken toward making offers such that the Commission could not put a great deal of weight on the prospect of credible alternative offers being made. Accordingly the Commission gave clearance for the acquisition.

Background

On 19 December 2008, the Commerce Commission received an application from Fletcher Building seeking clearance to acquire up to 100 per cent of the assets of Stevenson's Whangarei and Auckland masonry businesses.

FletcherBuilding's masonry business is part of its larger Infrastructure Division. One of the businesses within that division is Firth, which designs and manufactures concrete and concrete masonry products. FletcherBuilding has a block making plant located in Auckland (at East Tamaki), as well as in other locations throughout the country. It does not have a masonry plant in Whangarei and instead supplies customers in Whangarei from its Auckland plant.

The Stevenson Group is a major player in the construction industry, supplying aggregates and a very wide range of concrete-based building materials throughout New Zealand. Its Building Products Division had masonry block plants in Auckland (at Drury), Whangarei and Christchurch.