New Zealand Watchdog Says No To Huge Dairy Merger

WELLINGTON: New Zealand's monopoly watchdog, the Commerce Commission, initially has rejected a planned merger of the New Zealand Dairy Board and most of the country's dairy companies into the world's 12th largest dairy group. The Commission is asking for more information and a future meeting with interested parties. A date for the final decision has not been announced. The New Zealand Dairy Board and most of the country's dairy companies announced plans in early May to merge and form a mega-dairy company, which would process at least 95% of the country's milk supply. "The strategy planned by the dairy industry and supported by the government is to position the industry better and on a more commercial basis to grow both its sales and its earnings, thereby improving the incomes of farmers and the wealth of rural communities," says New Zealand Finance Minister Bill Birch. Birch says the initial rejection doesn't necessarily derail the planned merger. Working with the Commission to get approval for the merger remains the responsibility of the dairy industry and its leaders, he says. In its ruling, the Commission cited concerns that the new company, NewCo, would have the potential to control all milk produced by farmers, which could lead to lower prices for farmers, who receive their income from the dairy companies, and increased prices for consumers.

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