10 Jun 2015

Wool scour monopoly mooted

3:20 pm on 10 June 2015

The Commerce Commission is holding a conference today before making a final decision on whether to allow a wool scouring monopoly in New Zealand.

In draft decision earlier this year, the commission said it would approve Cavalier Wool Holding's application to buy New Zealand Wool Services International's wool scouring business.

The two companies reached an agreement last year to amalgamate wool cleaning services, in response to a declining wool supply and increasing competition from Chinese scours

Cavalier is the largest scouring operator with plants at Napier and Timaru, cleaning wool for exporters on a commission basis.

Wool Services International is New Zealand's biggest wool exporter but also runs scours at Napier and Christchurch.

The wool industry will end up with just the two Cavalier scouring plants if the merger goes ahead.

The commission has acknowledged that the merger would create a monopoly but considers that the benefits, including lower costs, will outweigh the loss of competition.

It is due to make a final decision before 25 June.

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