Watchdog flexes muscles over Sanford's take over bid

Sanford wants order in the industry, with a single brand to sell into China. Photo / Brett Phibbs

The Commerce Commission is to focus on the supply of mussels within New Zealand in its investigation into fisheries company Sanford's application for clearance to buy the Pacifica Seafoods Group of companies.

In a statement of preliminary issues, published yesterday, the commission said both Sanford and Pacifica farmed and processed mussels, and sold them on the wholesale market.

"While the majority of these mussels appear to be exported, both Sanford and Pacifica supply their mussels in New Zealand and this New Zealand supply is the focus of the commission's investigation," the commission said.

Sanford had submitted that, after acquisition, a number of competitors supplying mussels, salmon and oysters would be able to expand their operations in the event the merged entity raised its prices.

The commission said it would test the accuracy of that submission, investigating who the main competitors were, and the nature of that competition.

The commission was also interested in looking at how difficult it was to enter the aquaculture industry.

Historically, barriers to entry appeared to have been relatively high, but Sanford had submitted that recent Government initiatives had reduced those barriers, the commission said.

It would also look at whether customers would be able to exercise any countervailing power against the combined entity through the threat of switching or any other mechanism.

The commission is aiming to make a final decision by November 26, but said that could change.

- NZPA