Commission clears Mentec acquisition of Annett & Darling
Published02 Oct 1997
The Commerce Commission today cleared a business acquisition that would permit Mentec Limited to acquire up to 100 percent of the shares in Annett & Darling Limited (Andar).
Commission Chairman Dr Alan Bollard said that the Commission was satisfied that Mentec would not acquire or strengthen a dominant position in the national market for the manufacture and distribution of wool scouring systems.
While the proposal would combine the businesses of the only two wool scour manufacturers in New Zealand, the combined entity would be constrained by potential entrants to the market and by customers.
As Mentec and Andar's experiences show, a general engineering firm could commence manufacturing wool scours with very little capital outlay and in a relatively short period of time. Moreover, there are several foreign manufacturers that could supply wool scouring systems to New Zealand should the combined entity attempt to raise prices substantially.
In addition, wool scourers themselves could constrain the combined entity through their control of intellectual property rights over some wool scour technology.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market. Parties can apply to the Commission for clearance, which will be given if the Commission is satisfied that dominance is not acquired or strengthened.
Mentec and Andar both manufacture wool scouring systems and engage in general engineering work from their workshops in Timaru. The wool scouring process involves the use of a range of equipment which together form a continuous system for the preparation, washing and cleaning of grease and other impurities from wool.
Mentec has manufactured and distributed wool scouring systems for three years and Andar for more than 40 years. Andar is a 100 percent subsidiary of the New Zealand Wool Board, which purchased it in 1990.
The New Zealand market for the manufacture and distribution of wool scouring systems is small, with only three new wool scours having been sold in the country in the last five years.
