The Commerce Commission today cleared Thorn Rentals Trading Incorporated, trading in New Zealand as Dominion Television Rentals (DTR), to acquire all of the rental contracts and appliances subject to those contracts of Group Rentals New Zealand Limited.
Commission Deputy Chairman Peter Allport said that the Commission was satisfied that, should the acquisition go ahead, Thorn Rentals would not acquire or strengthen a dominant position in any market.
The Commission concluded the relevant markets were national markets for the rental of household electrical appliances to domestic customers and for the rental of household and other electrical appliances to commercial customers.
While DTR and Group Rentals are the only nation-wide appliance rental firms, they are constrained by the large number of smaller competitors who each operate in smaller geographical areas.
A further constraint is the increase over the last few years in the availability of lower-priced, more reliable appliances, and the availability of long-term hire purchase agreements. These mean that buying an appliance can at times be a substitute for renting.
Also, there are few barriers to entry in either market. A new entrant needs to cover the costs of suitable premises and obtaining appliances.
Considering all these factors, the Commission concluded that should Thorn Rentals increase prices or reduce services, then existing competitors could expand and new ones could enter the markets.
