Goodman, Wattie merger to get full scrutiny

Press, 24 December 1986, Page 10

Goodman, Wattie merger to get full scrutiny

PA Wellington The Commerce Commission will hold an extended investigation into the proposed merger between Goodman Fielder, Ltd, and Wattie Industries, Ltd. It has expressed concern about the market power the two companies combined could have. The Commission can, if it sees fit, make a decision on a proposal within 20 days. The 20-day period for the Goodman Fielder-Wattie proposal was to expire today. The decision to conduct an extended investigation means the Commission can now take another 80 days before making a decision.

The chairman, Mr John Collinge, said in a statement that the decision to go for an extended investigation had followed advice from Commission officers that, should the

merger go ahead, the combined new company’s share of various product markets would be high. “The officers believed that this share was likely to further increase for some of these products following deregulation in their (the products’) markets,” Mr Collinge said. Barriers to entry in these markets appeared to be higher than had been indicated in the merger application made to the Commission.

Goodman Fielder and Wattie, through their combined strength and vertical integration, were in a position to substantially increase their alreadyhigh 79% combined share of the flour market, Mr Collinge said. This could have implications for bread baking and related markets where Goodman Fielder and Wattie were major players already. “Officials were also concerned about the combined market power of

the participants in the food industry generally, and its likely effect on the distribution and retail sectors.”

Other areas requiring further scrutiny were pet food, stock food, and food products such as poultry and ice cream, Mr Collinge said. Commission officers would seek further information and then a decision would be made whether to call for public submissions and to hold conferences about the proposal, he said.