The Commerce Commission yesterday cleared Mainland Products Limited to acquire up to 100% of the shares in Food Solutions Group Limited.

Commission Chairman Peter Allport said that the relevant market is that for the wholesale distribution of smallgoods in New Zealand.

Food Solutions Group was formed in 1997 to acquire two long established smallgoods producers, Huttons NZ Limited and Best Corporation Limited. Mainland, a subsidiary of Kiwi Co-operative Dairies Limited, owns Frasers Bacon Limited, another long established smallgoods manufacturer in Oamaru.

The Commission found that while Food Solutions Group is by far the largest smallgoods producer and that while the proposal will result in aggregation of market share, there are several small to medium sized competitors with the capacity to increase output, and that entry conditions are not onerous. The major purchasers, the supermarket chains, have considerable countervailing power, and the possibility of increased imports is a further constraint.

Mr Allport said the Commission was satisfied that the constraints on Mainland's market power would be sufficient to prevent the combined entity acquiring or strengthening a dominant position in the wholesale distribution of smallgoods market.

Media contact: Commerce Act Manager Geoff Thorn

Phone work (04) 498 0958

Commission media releases can be viewed on its web site www.comcom.govt.nz