Regulator threatens to cork deal

French wine and spirits company Pernod Ricard has been put on notice by the Commerce Commission that clearance for the purchase of the local business of Allied Domecq might be overturned.

The commission said yesterday it had opened an investigation into the implications of Pernod Ricard failing to honour a commitment to offload key brands held by Allied Domecq.

In a deal completed at the end of July last year, Pernod Ricard bought listed English wine and spirits firm Allied Domecq.

Earlier that month, the commission cleared the acquisition in New Zealand subject to Pernod Ricard meeting a voluntary offer to sell Allied's local still wine brand Chasseur and the Aquila, Chardon, Italiano and Lindauer sparkling wine brands.

Pernod Ricard had until this July to divest itself of the brands.

"Pernod Ricard would lose the benefit of this clearance decision if the divestment undertakings are not completed," the commission said.

A commission spokeswoman said as the divestment had not yet happened, it was opening an investigation now which "will consider the competitive implications of Pernod Ricard retaining assets that are subject to divestment undertakings".

The spokeswoman could not say how long the investigation would take.

It has been opened under section 47 of the Commerce Act, which says a person must not acquire assets or shares in a business if the acquisition would have, or be likely to have, the effect of substantially lessening competition.

The rules allow acquiring parties to apply voluntarily for clearance if they have doubts about whether the purchase will contravene section 47.

"When clearance is not sought, or an acquisition is not completed in line with a clearance decision, it is open to the commission and to third parties to challenge the acquisition in the courts if it appears to contravene section 47," the commission said.

A Pernod Ricard New Zealand spokeswoman said there would be no comment until today. However, it is understood the company is happy to enter into discussions with the commission about the issue.

The commission said it did not consider the deal raised competition issues in the gin market. Allied's gin brands include Beefeater and Seagers gins; Pernod Ricard has Seagrams.

DRINKS TABLE

Pernod Ricard
*Publicly listed French wine and spirits producer and distributor.

*At the time of the Commerce Commission clearance, primary wine brands in New Zealand included Jacob's Creek, Wyndham Estate and Framinghams.

Allied Domecq
* Allied Domecq Wines (NZ) had a variety of still-wine brands, including Chasseur, and sparkling wine brands including Lindauer, Aquila, Chardon and Italiano.

Commerce Commission
* Last year, the commission cleared Pernod Ricard to buy Allied subject to divestment of key Allied brands by July this year.

* The commission is now investigating what the implications are of Pernod Ricard failing to met this target.