New Zealand’s Commerce Commission is seeking opinions to help it decide whether or not to grant clearance to Woolworths’ proposed acquisition of Beak & Johnston.

In its preliminary statement, the Commerce Commission outlines the key competition issues it considers important in making the decision.

“At this stage, we consider our investigation will likely focus on whether the Proposed Acquisition would be likely to substantially lessen competition in the relevant market (or markets) due to vertical effects,” the Commission said.

Vertical effects occur when a merger gives a merged entity a greater ability to engage in conduct that prevents rivals from competing effectively.

Such a conduct can be refusing to deal with competitors completely or worsening the terms for those competitors such as by raising the prices it charges, the regulator explained.

Woolworths announced its intention to fully acquire the New Zealand arm of small goods and ready-meals supplier Beak & Johnston last year and filed for clearance early last month.

In its application, Woolworths claimed that there was no overlap between the two companies’ businesses since Woolworths did not engage in comparable manufacturing in New Zealand and Beak & Johnston was not a retailer.

The Commerce Commission has invited interested parties to provide comments on the likely competitive effects of the proposed acquisition by February 24 and is expected to make a decision on March 12. 

However, this date may be extended if the material before the regulator at that time does not allow it to be satisfied that the proposed acquisition will not have, or would not be likely to have, the effect of substantially lessening competition in a market in New Zealand.

Beak & Johnson’s brands include Pitango, Artisano, Ready Chef, Beak & Sons, and Strength Meals.