The Commerce Commission has opened an investigation to determine whether Fulton Hogan's proposed acquisition of Stevenson Group construction materials business will lessen competition in any relevant market.
Christchurch-based Fulton Hogan last month signed an agreement to buy the business in a deal that will see Fulton Hogan take full ownership of Stevenson's quarries and concrete plants, transport, laboratory services and associated plant and equipment. The two companies said the terms of the deal were confidential and it's expected to settle by July 31.
At the time, neither company anticipated needing the commission's approval and today the regulator said they haven't applied for clearance.
According to the commission, if firms do not apply for clearance it can initiate an investigation under the Commerce Act. If a person is found to have beached the act they may be subject to a penalty of up to $500,000 for an individual or $5 million for a firm.
The initial focus of the investigation will be on the potential competitive effects of the proposed acquisition on quarry markets in Auckland and North Waikato.
It will also consider whether any competitive effects arise from Fulton Hogan's proposed acquisition of Stevenson's concrete plants, transport, laboratory services and associated plant and equipment, the commission said.
When the deal was announced Fulton Hogan chief executive Cos Bruyn said the acquisition complements the firm's vertical supply chain and gives it a long-term supply of quality aggregates to meet growing demand in Auckland and Waikato.
For his part, Stevenson chief executive Mark Franklin told BusinessDesk the company has been a long-term owner of the construction materials, citing the Drury quarries as an example that has been part of the group since 1939, but that it's now probably "more valuable as part of someone else's supply chain".