The Commerce Commission today cleared the meat processing company Canterbury Meat Packers Limited to acquire Phoenix Meat Company Limited.

Commission Chair John Belgrave said the Commission was satisfied that the proposed acquisition would not have, nor would be likely to have, the effect of substantially lessening competition in the market for procurement of beef for slaughter and processing in the South Island.

The acquisition would result in the merged entity becoming the biggest slaughter and processing company in the South Island. However, the Commission considered that competition from Alliance, PPCS and smaller players was strong and increasing. Competitors are expanding capacity or upgrading facilities.

The Commission gave careful consideration to whether the acquisition might materially increase the likelihood of coordination between firms in this market in the South Island. The Commission considered that while there were some market characteristics which made collusion more likely, these were balanced by other factors such as the lack of excess capacity. On balance, the Commission considered that the scope for the exercise of coordinated market power would not be materially enhanced by the acquisition.

This is the second business acquisition decision made using the substantial lessening of competition (SLC) test under the recently amended Commerce Act.

"While this decision is important to the two parties involved, the first few decisions we make under the new SLC test are important guides to all businesses considering acquisitions," said John Belgrave.

Media contact: Commerce Commission Chairman John Belgrave

Phone work (04) 498 0963, cellphone 021 650 045

Senior Advisor Communications Jackie Maitland

Phone work (04) 498 0920, cellphone (025) 249 3407