The Commerce Commission has cleared Richmond Limited to acquire Lowe Walker NZ Limited's beef and sheep procurement and slaughtering assets.

Commission Acting Chairman Peter Allport said that the Commission was satisfied that should the acquisition go ahead, then Richmond would not acquire or strengthen a dominant position in any of the relevant markets.

In this case the markets are those for the:

  • procurement of sheep and lambs for slaughter and processing in the North Island;
  • procurement of beef for slaughter and processing in the North Island;
  • processing of meat by-products in New Zealand; and
  • wholesale supply of meat products in New Zealand.

Many competitors would remain in both the sheep and lamb and beef markets, including the largest existing player in both markets Affco New Zealand Limited. In each of these markets Richmond/Lowe Walker's combined market share would be inside the 40 percent safe harbour outlined in the Commission's Business Acquisitions Guidelines.

The proposal would have no significant impact on competition in the markets for meat by-products and for wholesale supply of meat, where there is considerable competition from companies throughout New Zealand.

Background

The major assets which Richmond intends to acquire are:

  • six beef processing plants at Te Aroha, Dargaville, Hastings, Paeroa, Hawera and Awatoto (near Napier);
  • one sheep processing plant at Awatoto, and a lamb processing plant at Hastings;
  • a 10.9 percent shareholding in Waitotara Meat Company Limited;
  • various brand names;
  • export quota; and
  • a blood processing facility at Hawera.

The Business Acquisitions Guidelines published by the Commission state two safe harbours within which dominance is unlikely to be acquired or strengthened. These are:

  • a combined market share of less than 40 percent; and
  • a combined market share of less than 60 percent if at least one other competitor has no less than 15 percent of the market.

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply for a clearance which the Commission will grant if it is satisfied that dominance is not acquired or strengthened. A clearance, if granted, protects the acquisition from court action under the Act.

Media contact: Commerce Act Manager Jo Bransgrove

Phone work (04) 498 0958

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

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