Watchdog gives Cavalier go ahead

Cavalier Wool Holdings Ltd has received Commerce Commission permission to purchase the assets of New Zealand Wool Services Ltd (WSI) but WSI chairman Derek Kirke said there was "a long way to go" before any bid would be considered.
If the takeover occurred, Cavalier would control the supply of scoured wool in New Zealand, with all of it coming through its Awatoto plant.
In a preliminary decision last month, the commission said the wool scouring industry could go the way of Australia's - most of their wool was scoured in China.
The commission's decision yesterday said the benefits of a monopoly outweighed the detriments.
Kirke said the decision merely meant that Cavalier's bid was now a possibility and the fait accompli attitude from Cavalier was "irritating".
"Cavalier is just one option the board and the receivers could consider," he said.
Cavalier made its request to the commission for permission to take over WSI after a 63.8 per cent share became available through the receivership of South Canterbury Finance.
Cavalier's $40 million offer for WSI's assets and operations, made before Friday's decision, was not taken seriously because it lacked detail, Kirke said. "The devil is in the detail."
The offer promised jobs for workers at WSI's Whakatu scour, which would be mothballed along with its Cavalier's Clive and Timaru plants.
Mr Kirke said the decision was "extraordinary" in light of the affect it could have on related industries. Carpet manufacturer Godfrey Hirst would have all its wool scoured by Cavalier, its biggest competitor.
Godfrey Hirst general manager Tania Pauling said her company intended to appeal the decision.
"We feel an obligation to the rest of the industry to have this decision scrutinised," she said. "We don't think the whole industry should be reliant on just one wool scour."
If the monopoly failed to deliver it would put Godfrey Hirst at risk, she said.
She said she was looking forward to reading the decision's fine print.
Commission chair Dr Mark Berry said the acquisition would lead to industry synergies."The commission has found that there are likely to be considerable cost savings from the rationalisation of the wool scouring industry that Cavalier Wool proposes to carry out," he said.
"The rationalisation is likely to lead to lower production and administration costs, the freeing up of industrial sites, lower ongoing capital expenditure and improvements to wool handling."