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2011-6-14
The Commerce Commission has decided to authorise Cavalier Wool Holding’s acquisition of all of the wool scouring assets of New Zealand Wool Services International. If the acquisition occurs, Cavalier Wool will be the only wool scourer in New Zealand.
Cavalier Wool’s application was made under section 67(1) of the Commerce Act. The acquisition will clearly reduce competition in scouring and may lead to some price rises but the Act allows these losses to be outweighed by likely cost savings in the sector.
“The Commission has found that there are likely to be considerable cost savings from the rationalisation of the wool scouring industry that Cavalier Wool proposes to carry out. The rationalisation is likely to lead to lower production and administration costs, the freeing up of industrial sites, lower ongoing capital expenditure and improvements to wool handling,” said Commerce Commission Chair Dr Mark Berry.
For these reasons, the Commission concluded that the benefits outweigh the detriments and authorised Cavalier Wool’s application.
Source:Commerce Commission
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