The Commerce Commission has granted clearance for Farmlands Co-operative Society Limited to acquire 100% of the shares of Seales Winslow Limited.
Farmlands is a farming co-operative with over 80,000 shareholders across New Zealand. It operates a range of agricultural businesses including its NRM division, which focuses on supplying animal nutrition products to customers across New Zealand. In the South Island, Farmlands supplies its customers with pelletised compound feed that it manufactures itself. In the North Island, Farmlands uses toll manufacturers to supply it with the pelletised compound feed it distributes to its customers.
Seales Winslow is the animal nutrition division of Ballance Agri-Nutrients Limited. Similar to Farmlands, Seales Winslow manufactures a range of animal nutrition products, including pelletised compound feed products, and supplies these to customers across New Zealand.
Both parties manufacture and distribute animal nutrition products for production animals. In reaching its decision, the Commission considered the potential impact of the proposed acquisition on competition in regional markets for the bulk supply of supplementary feed for ruminants and, separately, the bagged supply of supplementary feed for ruminants (including for calves in particular).
The Commission raised potential concerns with the proposed acquisition because Farmlands and Seales Winslow are the two main suppliers of bulk and bagged pelletised compound feed for ruminants in various regions across New Zealand. However, after further investigation, Division Chair Dr Derek Johnston said the Commission is satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.
“Our investigation indicated that, while the merging parties are both significant suppliers of pelletised compound feed for ruminant animals such as dairy cows and calves, they also compete with suppliers of other types of supplementary feed for ruminants. These other feeds include single grains, often referred to as ‘straight’ feed, or feed that is a combination of grains, often referred to as ‘blend’ feed.”
“This means that farmers have choices other than just pelletised feed. As a result, we are satisfied that Farmlands is unlikely to be able to significantly increase prices, or lower the quality, of its bulk and bagged feed” Dr Johnston said.
A public version of the written reasons for the decision will be available on the Commission’s case register in due course.
Background
We will give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.
