“The proposed acquisition would leave the New Zealand market with a single provider of keg-pooling services, substantially reducing competition,” they said.
“Alternatives such as purchasing our own fleet of kegs or using one-way plastic kegs are not practical,” they added.
“The cost of purchasing and managing our own keg fleet is prohibitively high for a small, two-person operation.”
Both Kegstar and Konvoy rent beer kegs to breweries and provide logistics services.
They supply kegs on a pay-per-fill (PPF) basis and carry out some keg leasing.
Kegstar is owned by MicroStar Logistics, a United States company which operates a keg services business across Australia, New Zealand, Europe and the US.
Konvoy was placed into receivership in March and into liquidation in late May.
Kegstar in its notice seeking clearance to buy Konvoy said the proposed deal would not have the effect, or likely effect, of substantially lessening competition.
It said Konvoy NZ would cease independent operation in New Zealand with or without the proposed transaction.
That was because Konvoy was not viable as a standalone business in New Zealand or even if operating in association with the Konvoy Australian entities, Kegstar said.
“In any event, the New Zealand keg supply and logistics market is too small to support two providers of PPF services,” it added.
“Kegstar NZ will continue to face substantial constraint from alternative options to brewers to obtain kegs and keg logistics solutions ...” it added.
Kegstar owns kegs, delivers empty kegs to breweries for filling, tracks full kegs from breweries to licensed venues, collects empty kegs from venues and is responsible for keg maintenance and storage.
“We are concerned that the proposed acquisition would substantially lessen competition in the relevant markets in New Zealand,” the commission said.
The regulator said the merged entity could identify and “price discriminate” against groups that had differing abilities to switch to competitive alternatives outside of PPF.
It said self-supply was an example of an alternative to PPF.
The commission said to grant clearance for the proposed acquisition, it must be satisfied the merger would not substantially lessen competition.
Dylan Firth, Brewers Association executive director, last month said industry members had a range of views about the proposed acquisition.
He said some people worried about market share being taken over by one player but others said a takeover of Konvoy by Kegstar was better than alternatives.
Today he said there were still a variety of views about the proposal.
He added that in recent weeks, Konvoy had still been servicing customers, which was good to see.
“I still see lots of their product outside breweries.”
The Commerce Commission extended its decision date to December 4.
John Weekes is a business journalist covering aviation and court. He has previously covered consumer affairs, crime, politics and court.
