The Commerce Commission has cleared Armourguard Security Limited to acquire all of the shares in Inacro Limited, which owns Group 4 Security (NZ) Limited.
Commission Chair John Belgrave said that the Commission was satisfied that, if the proposal goes ahead, Armourguard would not acquire or strengthen a dominant position in any market in New Zealand. The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened.
In this case, the Commission concluded that the relevant markets are:
the national market for cash processing services, and
regional markets for manned security services.
In the market for cash processing services, the proposal would result in Armourguard having a market share outside the Commission's "safe harbours". The safe harbours are up to 40 percent market share or up to 60 percent if another competitor has 15 percent or more.
The Commission concluded that Armourguard would be constrained in this market by the one other major firm, Chubb NZ Limited, and the high countervailing power of the banks. Some of the banks have stated that if they were dissatisfied with prices and services of a security company, then they could switch to another company.
Armourguard's and Group 4's combined market shares in regional markets for manned security services would be within the safe harbours.
Public copies of the Commission's decision, Decision No. 419: Armourguard Security Limited and Inacro Limited, will soon be available from its website, www.comcom.govt.nz, and in hard copy from reception at its Wellington office, Level 7 Landcorp House, 101 Lambton Quay.
