The Commerce Commission has granted clearance to Dunlop Drymix Limited, a subsidiary of the Concrete Group Limited, to acquire the assets and business of six companies that collectively trade in New Zealand as Drymix. Each of the Drymix companies were placed into receivership in mid-2020.
Division Chair Dr Derek Johnston said that the Commission is satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.
Central to the Commission's decision was its assessment of what would happen to Drymix if it was not sold to the Concrete Group. In particular, the Commission considered and tested whether there was a realistic prospect that Drymix would be sold to an alternative purchaser who would supply bagged concrete and mortar products in competition with the Concrete Group.
"After careful consideration, the Commission is satisfied that Drymix would not be sold as a going concern. We consider that the receiver would close Drymix down and sell its assets individually. The assets, primarily land and bagging machinery, would not be used to compete against Concrete Group," said Dr Johnston.
"Given this, we are satisfied that the proposed acquisition is unlikely to substantially lessen competition."
A public version of the written reasons for the decision will be available on the Commission's case register in the near future.
Background
Concrete Group Limited (under the 'Cemix' brand) and Drymix both manufacture and supply a range of bagged concrete and mortar products. These products are designed for use in DIY and projects where small amounts of concrete are needed and are sold nationwide in large building product stores (eg Mitre 10 and Bunnings), hardware stores and other building products outlets.
Since the Drymix companies were placed into receivership in mid-2020, the receiver for Drymix has continued to operate Drymix as a going concern while it looked to sell the relevant assets and/or businesses.
We will give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.
