Commission declines to clear or authorise Ravensdown bid for SouthFert
Published21 Jun 1996
The Commerce Commission said today it cannot clear or authorise Ravensdown Corporation Ltd's proposal to acquire up to 100 percent of the shares of SouthFert Co-operative Ltd.
Ravensdown and SouthFert are the only manufacturers and wholesale suppliers of superphosphate, the only substantial importers and wholesale suppliers of high analysis fertilisers, and the only wholesale suppliers of urea, in the South Island.
Commission Member Terry Stapleton said that if the proposed acquisition went ahead, the Commission was not satisfied that the combined company would not acquire a dominant position in each of the South Island markets for the manufacture and wholesale supply of superphosphate; the importation and wholesale supply of high analysis fertiliser; and the wholesale supply of urea.
In reaching these conclusions, the Commission noted that the proposal would bring together the only companies currently active in each of the South Island markets in circumstances where there was unlikely to be any timely, sustainable or sufficient entry to those markets which would act as a competitive constraint on the combined company.
The Commission concluded that any constraint which might be imposed on the combined company by its co-operative structure would not be sufficient to address the dominance concerns.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market. However, it allows an otherwise prohibited acquisition to be authorised if the Commission is satisfied that public benefits outweigh detriments to competition.
Mr Stapleton said the Commission concluded that the public benefits did not outweigh the detriments to competition.
The public benefits claimed by Ravensdown included: employment savings, rationalisation, savings on equipment, lower distribution costs, and easier raw material procurement.
The detriments considered by the Commission included loss of: product and service quality, product efficiency, allocative efficiency, and innovation efficiency.
"The detriments are not outweighed by the public benefits," Mr Stapleton said, "and we cannot authorise the proposal."
