Story image

ComCom likely to approve Cavalier, NZ Wool Services to merge scouring operations

26 Mar 15

The Commerce Commission is likely to allow Cavalier Wool Holdings and New Zealand Wool Services International to merge their two wool scouring operations, which would ultimately make a monopoly of wool scouring services in New Zealand.

The antitrust regulator found in its draft determination that while the merger would see NZX-listed Cavalier Corp have an essential monopoly on wool scouring, the public benefits outweighs any loss of competition, as rationalisation of the industry would lead to lower costs, free up industrial sites and reduce ongoing capital expenditure requirements. Cavalier Wool Holdings is New Zealand's largest wool scouring business and the deal will see Cavalier Corp shrink its ownership from 50 percent to 27.5 percent in the scouring business.

"Our preliminary view is that the proposed acquisition would substantially lessen competition in the North and South Island wool scouring markets, and in the small domestic customer wool grease market," said Commerce Commission Chairman Mark Berry. "The Commission considers there is the potential for Cavalier Wool Holdings to raise prices after the acquisition because of the loss of the constraining influence of NZ Wool Services International. However, at this preliminary stage, the Commission is currently satisfied that the public benefits of the acquisition would outweigh the loss of competition."

In 2011, the antitrust regulator approved Cavalier's move to become a scouring monopoly, which was taken to the High Court by carpet maker Godfrey Hirst, which deeply opposed the move. The renewed application will follow the same argument as its 2011 one, Cavalier said in October when it announced the proposed merger.

The merged scouring business will be 55 percent owned by Cavalier, private equity firm Direct Capital and the government's Accident Compensation Corp, with WSI parent Lempriere taking a 45 percent stake. After the merger, pending final regulatory approval, WSI will separate out its scouring business to become a stand-alone wool exporter as a commission customer of Cavalier Wool Holdings.

The deal comes after Lempriere poured cold water in 2012 on Cavalier's takeover aspirations for WSI's scouring assets to build a wool scouring monopoly, and insulate itself from the threat of offshore scourers, particularly those in China.

The Commission is seeking submissions on its draft determination by April 21.

DigiCert conquers Google's distrust of Symantec certs
“This could have been an extremely disruptive event to online commerce," comments DigiCert CEO John Merrill. 
Protecting organisations against internal fraud
Most companies tend to take a basic approach that focuses on numbers and compliance, without much room for grey areas or negotiation.
Telesmart to deliver Cloud Calling for Microsoft Teams
The integration will allow Telesmart’s Cloud Calling for Microsoft Teams to natively enable external voice connectivity from within Teams collaborative workflow environment.
Jade Software & Ambit take chatbots to next level of AI
“Conversation Agents present a huge opportunity to increase customer and employee engagement in a cost-effective manner."
52mil users affected by Google+’s second data breach
Google+ APIs will be shut down within the next 90 days, and the consumer platform will be disabled in April 2019 instead of August 2019 as originally planned.
GirlBoss wins 2018 YES Emerging Alumni of the Year Award
The people have spoken – GirlBoss CEO and founder Alexia Hilbertidou has been crowned this year’s Young Enterprise Scheme (YES) Emerging Alumni of the Year.
SingleSource scores R&D grant to explore digital identity over blockchain
Callaghan Innovation has awarded a $318,000 R&D grant to Auckland-based firm SingleSource, a company that applies risk scoring to digital identity.
IDC: Standalone VR headset shipments grow 428.6% in 3Q18
The VR headset market returned to growth in 3Q18 after four consecutive quarters of decline and now makes up 97% of the combined market.