The Commerce Commission today declined to clear Goodman Fielder Ltd to acquire the New Zealand assets of the baking and milling operations of Defiance Mills Ltd.
Commission Chairman Dr Alan Bollard said that the Commission was not satisfied that, should the acquisition go ahead, Goodman Fielder would not acquire or strengthen a dominant position in any markets.
Both companies are based in Australia and have extensive interests in New Zealand.
Among Goodman Fielder's New Zealand interests are Quality Bakers New Zealand Ltd, Goodman Fielder Mills (NZ) Ltd and Bluebird Foods Ltd. It produces the Nature's Fresh, Molenberg, Country Split, Vogel's, Reizensteins and McGregors brands of bread.
Defiance owns and operates in New Zealand a range of milling, baking, crumbing and sandwich making businesses. It bakes bread under the brand name Countryfare.
Dr Bollard said that the Commission defined 15 markets relevant to the acquisition and investigated what impact the proposed acquisition would have on competition in those markets.
The Commission was not satisfied that Goodman Fielder would not acquire or strengthen a dominant position in seven markets. They are the markets for:
· the production and acquisition of industrial bulk flour in the South Island;
· the production and acquisition of industrial bagged flour in the South Island;
· the production and sale of retail bagged flour in the North Island;
· the production and sale of retail bagged flour in the South Island;
· the production and acquisition of premium pastry flour in the North Island;
· the production and acquisition of premium pastry flour in the South Island; and
· the production and sale of packaged bread in the South Island.
The competition concerns that arose in these markets in varying degrees depending on the market, were:
· High barriers to new entry.
· A lack of existing or potential competition.
· Suppliers to and acquirers from Goodman Fielder would be unable to constrain the company.
· The level of market share the combined entity would have if the acquisition went ahead. In some markets the share would exceed 80 percent.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply to the Commission for a clearance which will be granted if the Commission is satisfied that dominance is not acquired or strengthened.
A list of all the markets identified and investigated follows on the next page.
Copies of the Commission's report are available from reception, 7th floor, Landcorp House, 101 Lambton Quay, Wellington.
Markets identified and investigated by the Commission in making this clearance decision were the markets for:
· the production and acquisition of milling wheat in the North Island;
· the production and acquisition of milling wheat in the South Island;
· the production and acquisition of industrial bulk flour in the North Island;
· the production and acquisition of industrial bulk flour in the South Island; *
· the production and acquisition of industrial bagged flour in the North Island;
· the production and acquisition of industrial bagged flour in the South Island; *
· the production and sale of retail bagged flour in the North Island; *
· the production and sale of retail bagged flour in the South Island; *
· the production and acquisition of premium pastry flour in the North Island; *
· the production and acquisition of premium pastry flour in the South Island; *
· the production and acquisition of bran and pollard in the North Island;
· the production and acquisition of bran and pollard in the South Island;
· the production and sale of packaged bread in the upper North Island;
· the production and sale of packaged bread in the lower North Island; and
· the production and sale of packaged bread in the South Island. *
* Indicates markets where the Commission was not satisfied that Goodman Fielder would not acquire or strengthen a dominant position.
