The proceedings relate to the 2022 acquisitions by Alderson Logistics Limited of rival businesses, Supa Shavings and Mooreys. The Commission alleges that the merger of the businesses substantially lessened competition for the supply of chicken and goat bedding in the Waikato region.

Commission Chair John Small says that due to the potential for increased prices, reduced quality or choice caused by permanent structural changes to markets, the detection and prevention of anti-competitive, non-notified mergers is an enduring priority for the Commission, regardless of the size of the market.

“While mergers can bring many benefits to the economy by making businesses more efficient and innovative, some also have the potential to substantially lessen competition in the market to the detriment of consumers.”

Dr Small says the law is clear:  a person must not acquire assets of a business or shares if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market.

The Commission administers a voluntary clearance regime for mergers and acquisitions but can also take enforcement action against completed transactions if prior clearance is not sought.

As the civil proceeding is now before the High Court, the Commission will not be commenting further.

Background

Section 47 of the Commerce Act prohibits acquisitions that are likely to substantially lessen competition. The Commission administers a voluntary notification regime that allows firms to apply for clearance or authorisation if they consider their planned acquisition could raise competition issues.


While the regime is voluntary, if firms do not apply for clearance or authorisation, the Commission can initiate an investigation into a proposed or completed acquisition under section 47. If the Commission considers that an acquisition is likely to have breached section 47, firms should expect the Commission to consider seeking divestments as well as pecuniary penalties.


In 2022, the maximum penalties for breaches of section 47 increased. If a person breaches section 47 they may be directed to dispose of assets or shares and/or be subject to a penalty of up to $500,000 for an individual or, in the case of a firm, the greater of $10 million; three times the commercial gain resulting from the contravention; or if the commercial gain cannot be readily ascertained, 10% of the defendant’s turnover of the firm.