Photo: RNZ / Rebekah Parsons-King
*Amendment: This article has been updated to reflect a clarification by the Commerce Commission.
The High Court has penalised two companies $420,000 over an acquisition that substantially lessened competition in the wood shavings market.
The Commerce Commission filed proceedings against Alderson Logistics and associated company Supa Shavings, over the acquisition of ABS Carriers in 2022.
Pre-acquisition, ABS and Supa Shavings were the largest suppliers of bulk wood shavings in Waikato.
"The companies were each other's closest competitors and, when those assets were acquired, that competition was eliminated," commission chair John Small said.
"The Commission was not notified about the acquisition, so this case is an important reminder that while our clearance regime is voluntary, we can take action against mergers or acquisitions where clearance was not sought."
The case marked the first time the commission required a business that admitted breaching acquisition laws under the Commerce Act to divest the assets it had bought.
However, the commission said a deal to sell ABS fell through, meaning the divestment did not happen.
In her judgement, Justice Gardiner noted Alderson and Supa Shavings accepted they gained commercially from the deal for about 13 months, until a shavings supply shock in June 2023 affected their profitability.
Small said it was vital for firms to understand their obligations under the Commerce Act.
"While divestment was unsuccessful in this case, this shows the array of enforcement actions available to us," he said.
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
