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Mussel supply focus for regulator

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, Oct 14 NZPA - 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 today, 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 oyster at all stages of the supply chain 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 to Sanford and Pacifica were, and the nature of that competition.

"Given the large volume of exports in this industry, the commission will investigate whether it would be rational for an exporter to divert sales away from the export sector to the domestic market, should the merged entity attempt to increases its price or reduce its quality."

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

Historically, the 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 any of the main shellfish and salmon customers would be able to exercise any countervailing power against the combined entity through the threat of switching or any other mechanism.

Under a draft timeframe the commission is aiming to make a final decision by November 26, but said that could change.

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