Commission clears merger of Huttons and Best businesses
Published29 Sep 1997
The Commerce Commission today cleared a business acquisition that would merge the business of Huttons NZ Ltd and the New Zealand businesses of Best Corporation Ltd into a new company which is likely to be called Food Solutions Ltd.
Commission Chairman Dr Alan Bollard said that the Commission was satisfied that Food Solutions would not acquire or strengthen a dominant position in the national market for smallgoods.
Under the proposal Food Solutions would purchase the smallgoods businesses of Huttons and Best, and the New Zealand frozen convenience food business of Best. Huttons is to own 70 percent of Food Solutions, and Best is to own 30 percent.
While the proposal would combine the businesses of the two largest suppliers of ham, bacon and other smallgoods, the Commission estimates that the proposal would result in Food Solutions having a market share of less than about 50 percent.
Competition would remain from about 80 remaining competitors. The larger competitors all appear to have the capacity to expand production given the appropriate incentives.
Significantly, supermarket chains can readily use their considerable buying power and switch to different suppliers if they are unhappy with price, quality or service.
Huttons is the largest smallgoods manufacturer in New Zealand, and is the only company that distributes all its products nationally. Best distributes most of its products in the area from Taupo northwards, but has some presence in the lower North Island, and to a lesser extent in the South Island.
The other manufacturers supply local and regional markets, with some providing limited national distribution.
