Commission clears Bulmer to acquire Harvest Wine's cider business
Published23 Jul 1997
The Commerce Commission yesterday evening cleared Bulmer Trading (NZ) Limited to acquire the cider making assets of the Harvest Wine Company Limited.
Commission Chairman Dr Alan Bollard said that the Commission was satisfied that, should the acquisition go ahead, Bulmer would not acquire or strengthen a dominant position in the market for the production and distribution of cider in New Zealand.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties to an acquisition can apply for a clearance, which will be granted if the Commission is satisfied that dominance is not acquired or strengthened.
In this case, the Commission concluded that the proposal would be within the safe harbours described in the Commission's Business Acquisitions Guidelines - namely that the merged entity would have less than 60 percent of the relevant market and would face competition from at least one rival with a market share of 15 percent or more.
Montana Wines has a market share of more than 15 percent, and four other companies have smaller market shares, and, should the acquisition go ahead, Bulmer would have less than a 60 percent market share.
In addition, there is potential for new entrants to enter the market given the appropriate incentives. For example, it would be feasible for wine producers to use their existing technology to move into cider production if Bulmer increased its prices or lowered the quality of its products.
Bulmer Trading is entirely owned by Bulmer Australia. Bulmer Australia distributes "Strongbow" cider in New Zealand. HP Bulmer Holdings plc is the English parent company of the Bulmer group of companies. The group is also involved in the production and distribution of cider in Britain, Belgium and the Netherlands.
Harvest is New Zealand's biggest cider producer. It produces, distributes and exports "Harvest" cider, and also produces "Stonehouse" cider under contract to New Zealand Breweries.
The proposed acquisition is of Harvest's cider making assets and undertaking, and the goodwill of that business. It does not include Harvest's sparkling apple juice, wine and mead businesses.
Copies of the Commission's report are available from reception at its Wellington office,
