The High Court has upheld the Commerce Commission's decision to decline to clear or authorise Ravensdown Corporation Ltd to acquire all the shares in SouthFert Co-operative Ltd.

Commission General Manager John Feil said Ravensdown appealed the Commission's decision, and the High Court has now released its judgment rejecting the appeal.

Ravensdown and SouthFert are the only importers, manufacturers and wholesale suppliers of fertiliser in the South Island.

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market. Parties can apply for a clearance and the Commission will grant it if it is satisfied that dominance is not acquired or strengthened.

In this case, the Commission was not satisfied that the combined company would be not be dominant 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.

However, the proposed acquisition could have been authorised if the Commission had been satisfied that public benefits outweighed detriments to competition.

The Commission was not satisfied of this either.

Ravensdown based its appeal on three broad areas:

· that the Commission had incorrectly defined the relevant markets;

· that in deciding that Ravensdown would acquire dominance, the Commission had placed too little emphasis on Ravensdown's co-operative ownership and too much on barriers facing potential new entrants to the markets; and

· that the Commission had overvalued detriments from the proposal and undervalued its benefits.

The High Court said Ravensdown's central argument was, in effect, that allowing a monopoly in the South Island fertiliser markets would lead in efficiencies of scale that would result in better use of resources.

The Court did not accept this argument.

In upholding the Commission's decision to decline clearance it said: "We are satisfied the Commission not only correctly directed itself as to the test of dominance but properly applied that test to the circumstances of the case."

In upholding the Commission's decision to decline authorisation it said: "Our overall conclusion in relation to authorisation is that the Appellant has not shown the Commission was wrong in the decision it reached."

Mr Feil said he is delighted with the Court's decision.

"The High Court has upheld both the process we used and the way we applied it," he said. "This is a positive message for any company coming to the Commission for clearance or authorisation - their proposal will be carefully and correctly considered by the Commission."

Media contact: Communications Officer Vincent Cholewa

Phone work (04) 498 0920, home (04) 479 1432