The commission has received an application from George Weston Foods, trading as Mauri New Zealand, to buy the wheat milling and storage assets, including land, used by Farmers Mill.
It has gone out to interested parties after the release of a statement of preliminary issues to investigate if the buyout would reduce competition. Submissions close on July 3.
A purchase price was undisclosed with the sale subject to conditions including regulatory approval from the commission.
The mill was opened in Washdyke in 2013 as New Zealand’s only independent grower-owned and operated flour producer.
Farmers Mill supplies bulk and bagged flour to industrial food manufacturers, bakeries and some retailers.
The mill is owned by Grainstor, the South Island’s largest grain storage facility. Directors for both companies are listed as Ashley Biggs, Raymond Bowan, Antony Howey and Murray Turley.
A Commerce Commission spokeswoman said in a statement the commission could only give clearance to a proposed merger if it was satisfied it was unlikely to have the effect of substantially lessening competition in a market.
Mauri operates flour mills in Auckland, Wellington and Christchurch, supplying flour in bulk to large users of flour such as industrial food manufacturers and bagged flour to wholesalers, bakeries and supermarkets.
Australian-based George Weston Foods is owned by Associated British Foods Plc, a company listed on the London Stock Exchange.
Both Mauri and Farmers Mill also supply a broll byproduct of the wheat-milling process most commonly used as an input for animal feed.
Farmers Mill bought its wheat-milling plant from a company in Italy in 2012 for about $12 million.
When the mill was launched the following year with former prime minister John Key cutting the ribbon, Mr Turley, as chairman, said South Canterbury arable farmers had teamed up to mill their own grain to gain more control of their grain production and create a homegrown product.
"We have harnessed our own resources to secure the industry’s future, investing more than $10 million to get Farmers Mill up and running," he said at the time.
Initially 12 local farmers were involved in the ground-up building of the mill.
The commission expects to make a decision by August 7, although this could be extended as the investigation progresses.
