Commission clears Sealed Air/W R Grace merger
27 November 1997
The Commerce Commission today cleared the merger of Sealed Air (NZ) Ltd and W R Grace (NZ) Ltd.
The proposed merger forms part of a worldwide transaction to combine the flexible packaging operations of two United States companies, Sealed Air Corporation and W R Grace & Co. In New Zealand, the proposed merger would be implemented through a new public company acquiring the Sealed Air and Grace packaging businesses.
Commission Chairman Dr Alan Bollard said that the Commission was satisfied that the merged entity would not acquire or strengthen dominance in any of the five relevant markets. All these markets relate to industrial packaging of food products and are nationwide.
In four markets there would be some aggregation of market power but considerable competition would remain. That is, in the markets for the supply of bone protection packaging, thermoform film packaging, vacuum skin packaging and flexible packaging machinery.
In the fifth market, that for the supply of vacuum shrink packaging, the combined entity would acquire a market share large enough to take it outside the "safe harbours" published by the Commission in its Business Acquisitions Guidelines.
These safe harbours are up to 40 percent market share if there is no other substantial competitor, or up to 60 percent if a competitor has at least 15 percent market share. The exact market shares of Sealed Air, Grace and other companies in the market are commercially sensitive and have been treated as confidential by the Commission.
Dr Bollard said that where market shares are outside the safe harbours the Commission considers a range of additional economic factors to help determine if dominance is acquired or strengthened.
In this case, existing competitors are well positioned to expand if the merged entity increased prices or reduced the quality of service. There is also some possibility of companies operating in similar markets overseas entering the New Zealand market.
Furthermore, the main customers are larger meat companies which have considerable buying power that would constrain the merged entity. These companies told the Commission that they have used their market power as substantial customers in the past and would do so again if they were unhappy with prices or service.
Public copies of the Commission's decision are available from reception at its Wellington office, level 7, Landcorp House, 101 Lambton Quay.
Media contact: Commerce Act Manager Jo Bransgrove
Phone work (04) 498 0958
Communications officer Vincent Cholewa
Phone work (04) 498 0920
Commission media releases can be viewed on its web site, http://www.comcom.govt.nz