Commerce Commission clears Port of Tauranga to acquire Owens Services BOP
Published12 Feb 2002
The Commerce Commission has cleared Port of Tauranga Limited to acquire up to 100% of the assets or shares of Owens Services BOP Limited.
Commission Deputy Chair Paula Rebstock said this was the first application involving vertical integration to be considered by the Commission under the substantial lessening of competition test.
"In assessing vertical acquisitions, the Commission's main concern is where a position of substantial market power in one market is likely to be strengthened or leveraged into another market," said Ms Rebstock.
"Port of Tauranga has a substantial degree of market power in the provision of port infrastructure at Tauranga. The Commission has considered whether Port of Tauranga could expand this market power into the downstream markets of log marshalling services and container maintenance and cleaning services, and whether this would represent a substantial lessening of competition."
Ms Rebstock added: "In this particular fact circumstance, the Commission determined that major log exporters and shipping companies have significant countervailing power, which is likely to constrain the combined entity. Such countervailing power would likely be considerably diminished if port usage was characterised by smaller disparate exporters."
Port of Tauranga's principal activities are the ownership and operation of the wharf infrastructure and marine services at the Port of Tauranga.
Owens business activities include log marshalling, materials and wharf handling, mechanical services and a shipping agency.
Background
Some of the competition concerns that may be raised by vertical integration are:
the facilitation of co-ordinated behaviour;
foreclosure of entry into one or other of the vertical levels affected;
an increase in entry barriers; and
access concerns.
Media contact: Manager, Market Structure, Richard Braae
