The Commerce Commission has closed its investigation into David Ferrier’s acquisition of a 70% equity interest in Cavalier Wool Holdings Limited as its concerns with the transaction have been addressed.
In October last year the Commission opened an investigation of the acquisition under section 47 of the Commerce Act. The Commission was concerned that the acquisition by the owner of New Zealand’s only wool dumping operation, New Zealand Wool Dumping Limited (NZWD), of the majority shareholding of New Zealand’s only scouring business, Cavalier Wool Holdings, might enable him to raise prices or lower the quality of either of those services.
Mr Ferrier had not sought clearance for the acquisition under the Commission’s merger regime.
Since the Commission opened its investigation, Mr Ferrier has sold down his majority interest in NZWD. The Commission considers this action has resolved its competition concerns.
The reasons outlining the Commission’s decision have been published on its website.
Section 47 of the Commerce Act prohibits acquisitions that are likely to substantially lessen competition. The Commission administers a voluntary regime that allows firms to apply for clearance if they consider their planned acquisition could raise competition issues. If firms do not apply for clearance, the Commission can initiate an investigation into a proposed or completed merger under Section 47. If a person breaches Section 47 they may be subject to a penalty of up to $500,000 for an individual or $5 million for a firm.