Tegel not to monopolise New Zealand market

12-01-2009 | |

The New Zealand Commerce Commission has published its reasons for blocking the takeover of the poultry business of Brinks by Tegel.

Basic reason for this blockage is the fact that the resulting company would have made the chicken market less competitive in New Zealand.

Poultry integrator Tegel in May 2008 applied to the commission seeking to buy the chicken business of rival company Brinks.

Commerce Commission Chair Paula Rebstock said the Commission could not be satisfied that the proposed acquisition would not have or be likely to have the effect of substantially lessening competition in four markets.
The proposed acquisition would reduce the number of large chicken processors from three to two in the North Island, and from two to one in the South Island, where Tegel would have a monopoly.
According to the commission, Brinks is recognised as a price discounting catalyst in the industry.
Further it says the structure and characteristics of the industry would enhance the scope for coordinated behaviour, enabling the remaining suppliers to increase their prices.
Tegel is a vertically integrated poultry growing and processing company with its own breeding stock, hatcheries, feed mills, processing, distribution and manufacturing facilities throughout New Zealand.
Brinks’ business involves growing and processing poultry. The company is not vertically integrated.
Brinks supplies fresh and frozen chicken meat and processed chicken meat products primarily to supermarkets and the food service segment throughout New Zealand.