Ski resorts merger goes cold

By FIONA ROTHERHAM

Plans to merge the North Island's two ski resorts, Whakapapa and Turoa on Mt Ruapehu, have received another setback.

In a preliminary decision, the Commerce Commission has turned down for the second time an application by Ruapehu Alpine Lifts (RAL) to buy the Turoa Ski Resort from the receivers.

It will make a final decision on October 4 after further submissions, just weeks before RAL is due to take over ownership of the field. RAL general manager Dave Mazey said, however, it had not given up hope of changing the commission's mind.

"The advice we had when we went into this exercise was that preliminary decisions often take that sort of stance. This is just another step in the process."

The key issue is whether the merged company will provide more public benefit to the North Island skiing market than two independent operators would.

Mr Mazey said it would argue that only a merged entity could provide skiers with seamless passes and guided trails around the mountain between the two resorts. It could also mount overseas marketing campaigns that could never be achieved by marketing agreements between two independent operators.

Overseas visitors make up only 4 per cent of business at Mt Ruapehu compared with around 45 per cent to 50 per cent in the South Island ski industry.

RAL filed a second application after the competition watchdog rejected its original bid last year. The commission said the sale would give it a monopoly on the North Island ski market, which it treated as a distinct market to the South Island.

The Commerce Act prohibits business acquisitions that result in market dominance but can authorise such a deal if the public benefits outweigh any detriment.

Commission chairman John Belgrave said the commission's preliminary view on the latest application was that the detriments outweighed the benefits of having one owner of both skifields.

Preliminary estimates show economic detriments of between $764,000 to $3,380,0000 a year compared with estimated benefits of between $401,000 to $1,743,434 a year.

If the commission does decline authorisation, other parties have made final bids for Turoa. Receiver Gary Traveller confirmed there had been interest from France, Austria and Australia.

Mr Belgrave said the commission believed some of the benefits claimed by RAL could occur if some other party were to acquire Turoa.

Detriments include the ability of the merged company to increase prices and reduce the quality of service.

The ANZ Bank put the debt-laden Turoa Ski Resort into receivership after several years of poor snowfall and problems caused by the Mt Ruapehu eruptions. The company was estimated to owe more than $7 million.