The Commerce Commission today declined to clear PRI Flight Catering Ltd to acquire the flight catering business of Air New Zealand Ltd.
Commission Chairman Dr Alan Bollard said that the Commission was not satisfied that the proposal would not result in dominance being acquired or strengthened in the market for in-flight catering for domestic and international flights.
If the proposal were to go ahead, then PRI would have between 85 and 90 percent of the market and would be the only large operator in New Zealand.
Several small companies sub-contract to PRI and Air New Zealand but each can cater for only a few flights. For these small companies to expand would require substantial investment and certainty that customers would be available.
The only other competitors are overseas airlines that double cater their flights. That is, they cater for the return trip from overseas. However, double catering is practical on only some short flights, for reasons including limited space on aircraft, time of day of the flights and the turn-around time of aircraft.
"The small extent of existing competition and the limited threat of new competition would not be enough to provide an effective or potential competitive constraint on the combined company," Dr Bollard said.
