Comcom investigates PGG Wrightson over NAIT scheme fees

The Commerce Commission will look at fees charged during the adoption of the National Animal Identification and Trading Act 2012, commonly known as NAIT.

The Commerce Commission is investigating PGG Wrightson over the fees the rural services firm, which is controlled by China's Agria Corp, charged during the implementation of a national livestock tagging programme.

The antitrust regulator will look at fees charged during the adoption of the National Animal Identification and Trading Act 2012, commonly known as NAIT, the Christchurch-based agricultural company said in a statement.

The commission believes Wrightson breached the Commerce Act and will "seek a pecuniary penalty from PGW".

"The introduction of the NAIT programme was extremely challenging for the livestock industry and PGW committed a lot of effort and resources into making its implementation as effective as possible," chief executive Mark Dewdney said.

"PGW considers that the NAIT programme is an important initiative to help protect New Zealand farming's key role as a primary producer and exporter."

Wrighton has cooperated with the investigation and said the penalty, while significant, is unlikely to be "materially price-sensitive".

NAIT was an industry-based initiative which the government helped fund, requiring radio tags for cattle and deer and allowing nationwide tracing of livestock in a bid to bolster New Zealand's response to any biosecurity threats.

In February Wrightson reported a 47 per cent gain in first-half profit to $19.7 million in the six months ended December 30, beating analyst expectations.

Operating Ebitda climbed 51 per cent to $33.6 million and revenue from continuing operation increased 3.1 percent to $654.7 million.

Agria first invested in Wrightson in 2009 when the company was forced to raise new equity to repay bank debt during the global financial crisis, after Wrightson's funding lines dried up and scuttled a bid to merge with Silver Fern Farms a year earlier.

Wrightson shares were unchanged at 46.5 cents and have gained 1.1 per cent this year.