A commerce Commission decision - potentially allowing Cavalier Wool Holdings (CWH) to own a wool scouring monopoly - is "unbelievable", Wool Equities Ltd chairman Cliff Heath says.
Last week, the commission granted CWH authorisation to make an offer for New Zealand Wool Services International's (WSI) wool scouring assets.
Godfrey Hirst has already announced it intended appealing the decision, while WSI chairman Derek Kirke said last week that it was much too early to assume CWH would end up with a monopoly.
The decision, which the commission said would reduce competition and might lead to price rises, flew in the face of its statutory role to prevent such gross market distortions, Mr Heath said yesterday. The reasons the commission put forward for approving such a monopoly came nowhere near justifying its decision.
Wool Equities put undisputed arguments to the commission as to the negative impact of a monopoly to farmers.
"Therefore we are stunned to understand why they have reaffirmed that this monopoly is in the interests of the New Zealand economy and farmers." The commission talked of lower production and administration costs and improvements to wool handling.
But once any sector was captured by a total monopoly, price reductions and quality were something the captive customer "just doesn't get to experience", Mr Heath said.
In its determination, the commission said it was not satisfied the acquisition would not have, or would not be likely to have, the effect of substantially lessening competition in a market, but that it was satisfied it would result, or be likely to result, in such a benefit to the public that it should be permitted.
