Commission grants clearance for T&G application to acquire Freshmax

The Commerce Commission has granted clearance for Turners & Growers Fresh Limited to acquire 100% of the shares in Freshmax NZ Limited.

In reaching its decision, the Commission considered the potential impact of the proposed acquisition on competition in the markets for the wholesale supply of fresh produce, cool-chain distribution services and contract ripening services in New Zealand.

Chair Anna Rawlings said the Commission was satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.

“We consider that the presence of competing suppliers in the relevant markets, along with the countervailing power of some customers and growers, is likely to constrain the ability of T&G to raise prices or reduce service quality,” Ms Rawlings said.

“In addition, we considered whether the acquisition could affect competition by enabling T&G to coordinate with its competitors. We are satisfied that the fluctuating nature of supply and demand for fresh produce and the ability of customers to buy direct from growers would make coordination between the merged entity and other wholesalers unlikely.”

A public version of the written reasons for the decision will be available on the Commission’s case register in the near future.

Background

This decision relates to a clearance application from T&G that we registered on 11 February 2020, the subject transaction which T&G announced to the NZX on 17 December 2019.

T&G and Freshmax are both involved in the supply of fruit and vegetables (fresh produce) to retailers and other parties in New Zealand.

T&G grows, imports and wholesales fresh produce in New Zealand and exports locally grown fresh produce. T&G also operates a produce distribution network and undertakes contract ripening for customers. T&G is a wholly owned subsidiary of T&G Global Limited.

Freshmax imports and wholesales fresh produce in New Zealand. Freshmax provides distribution, fumigation, packing, ripening, quality control and cool-store services. Freshmax is a wholly owned subsidiary of Freshmax NZ Group Limited.

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.

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