The Commerce Commission today cleared Yates New Zealand Limited to acquire Watkins New Zealand Limited (in receivership) and Smiths Horticultural Distributors Limited (in receivership).

Commission Acting Chairman Peter Allport said that the Commission was satisfied that, should the acquisition go ahead, Yates would not acquire or strengthen a dominant position in any market.

Yates is a subsidiary of Arthur Yates & Co Ltd, a company incorporated in Australia. Yates and its parent company manufacture and distribute a wide range of consumer and commercial garden products in New Zealand and Australia.

Watkins and Smiths are both subsidiaries of Maine Investments Limited, and were placed in receivership on January 22. Watkins and Smiths operated as separate businesses until 1995 when their activities were merged. They manufacture and distribute a wide range of consumer and commercial garden products in New Zealand.

The Commission investigated the impact of the proposed acquisition on 11 garden and horticultural product markets.

The Commission's overall conclusion is that while the acquisition would result in aggregation in some markets, existing competition, and in some markets potential competition, would constrain the combined entity and would prevent it acquiring a dominant position in any market.

The Commission identified the relevant markets as:

The markets for the wholesale distribution of the following consumer garden products:

? garden merchandise;

? seeds and bulbs;

? lawn seed;

? plant food; and

? plant protection products.

The markets for the distribution of the following garden products to commercial users:

? vegetable seed;

? flower seed;

? plant food; and

? plant protection products.

The markets for the:

? manufacture of raw material used in growing media products*; and

? distribution of growing media to consumers and commercial users.

* The Commission received many submissions about the market for the manufacture of raw material used in growing media, mostly focusing on access to sphagnum moss peat in the North Island. The Commission concluded that there are alternative materials that can be used as either complete substitutes or as part of a blend. There is already an increasing trend towards using these alternative products. In addition, the combined entity would face potential competition from existing suppliers in the South Island and potential new suppliers.

Background

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply for a clearance, which will be granted if the Commission is satisfied that dominance is not acquired or strengthened.

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 website www.comcom.govt.nz