Fonterra's proposed Kotahi joint venture unlikely to lessen competition - final decision by Commerce Commission
15 March 2012
The Commerce Commission has declined to authorise a proposed Kotahi Logistics LP joint venture between Fonterra Co-operative Group Limited and Silver Fern Farms Limited, as it would be unlikely to harm competition, and therefore does not need an authorisation under the Commerce Act.
Fonterra lodged an application for authorisation with the Commission, in relation to the future activities of Kotahi. Kotahi intends to coordinate domestic and international freight services for its partners and customers. Fonterra applied for an authorisation as it was concerned the joint venture's activities may breach the Commerce Act.
"We have examined the areas of concern raised by Fonterra and have reached the decision that none of the arrangements proposed is likely to lessen competition or breach the Commerce Act. There must be a lessening of competition through the proposed arrangements of the joint venture for the Commission to consider granting an authorisation. For this reason our decision is to decline to grant an authorisation," said Dr Mark Berry, Chair of the Commerce Commission.
The Commission's final determination confirms its draft determination released in December 2011. It means that the Kotahi joint venture can go ahead but it would do so without the protection from potential legal action under the Act that an authorisation provides. However, any party wishing to take such action would need to prove that, contrary to the Commission's decision, the arrangement would be likely to harm competition.
"Should the facts of the situation change materially at any time, such that a substantial lessening of competition arises, the Commission can decide to reopen matters," said Dr Berry.
The Commission's final determination is available on the Commission's website at
The Commission may grant an authorisation for arrangements or practices which may be in breach of the trade practice provisions of the Commerce Act if it is satisfied that the public benefits of the arrangement outweigh the harm arising from the loss of competition.
The granting of an authorisation protects the parties from action under the Commerce Act by the Commission and private individuals.