The Commerce Commission has published its reasons for declining to grant clearance for DFS Group Limited (DFS Galleria) to acquire 100 % of the shares in The Nuance Group (Nuance).

The reasons can be viewed on the Commission's website. The clearance application was declined on 28 March 2008.

Commission 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 market for the retail supply of duty free goods at Auckland International Airport to international air travellers.

The Commission considered that the proposed acquisition would see the removal of the competition posed by Nuance. Duty free consumers would no longer have a choice of duty free retailers, and no longer have the ability to compare prices between competing retailers at AucklandInternationalAirport.

The Commission considered there was likely to be very limited competition from high street duty free retailers, and duty free retailers located at route-paired airports. This competitive constraint would be likely to fall well short of the competition currently posed by Nuance.

The Commission was also concerned that Auckland International Airport Limited (AIAL) would have little reason to constrain the combined entity's duty free prices. Further, the Commission considered that AIAL would be unlikely to create an additional duty free concession, as AIAL has a stated policy of only having one duty free concessionaire at Auckland International Airport.

Background

The reasons for the decision can be viewed on the Commission's website  www.comcom.govt.nz under the Clearances Register. Click on the decision number in the right hand column of the table.

DFS Galleria is a Hong Kong based company that operates on-site and off-site airport duty free stores in Auckland and Christchurch. DFS Galleria is jointly owned by LVMH Moet Hennessy Louis Vuitton, and its original founder, Mr Robert Miller.

Nuance is jointly owned by GECOS/Gruppo PAM SpA, and Stefanel SpA, and is based in Switzerland. In New Zealand, Nuance operates duty free stores, principally under the Regency brand, at Auckland and WellingtonInternationalAirports.