Whangarei Mayor Stan Semenoff's sand empire is expanding.
The Commerce Commission has given the green light to his acquisition of a sand mining business at Tomarata, 15km south-east of Mangawhai.
A company which Mr Semenoff set up in November last year, Tomarata Sand, now has commission permission to take over Coastal Resources sand mining operations at Tomarata.
Clearance for the acquisition follows a commission investigation of a complaint in October 2008 that a deal between Mr Semenoff and another major Northland sand supplier could result in sand price increases north of Whangarei.
The investigation looked at whether an agreement between Semenoff Sand Supplies and Lakeside Business Park in relation to the sand resource at Lakeside's Ruakaka site was likely to contravene the Commerce Act.
Section 27 of the Act says no one can enter into a contract or make an arrangement likely to substantially reduce market competition.
Mr Semenoff extracted sand from a Uretiti site until July last year, when he moved his sand mining operation to Lakeside's Ruakaka site.
Lakeside director John Keith and Mr Semenoff had struck a sand sale and purchase agreement in late 2008, which gave Mr Semenoff the exclusive right to explore, extract, load and haul the sand resource at Lakeside's 65ha Ruakaka property.
Semenoff Sands created a new entity, Envirosands Northland, to give effect to the agreement.
The Commerce Commission found that Semenoff Sands and Lakeside are the two largest sand suppliers in Northland.
The next largest supplier is Kaipara Water Transport, which dredges sand from the Kaipara Harbour.
Mr Semenoff owns 25 per cent of this company and is a director.
Other suppliers include Coastal Resources Ltd, wholly owned by Kaipara Ltd and referred to in the commission investigation report as Kaipara Tomarata.
The report, produced in January, noted that Kaipara Tomarata was for sale.
Commission staff considered that if it was bought by an independent third party it could expand its operation if Semenoff Sand Supplies tried to raise prices significantly.
Others in the Northland sand supply business are McCallum Bros, Firth, Winstone Aggregates, Atlas Concrete and Allied Concrete.
Commission investigators found existing and potential competition provided a competitive restraint on Semenoff Sand Supplies.
Therefore, its arrangement with Lakeside did not have the purpose or likely effect of substantially reducing competition.
Regarding the proposed Tomarata Sand acquisition of Coastal Resources, the commission concluded that while it would remove one of the few suppliers in the market, on balance, existing competition was likely to provide a competitive constraint on the combined entity.
Commerce Commission chair Mark Berry said the commission was satisfied the proposed acquisition would not have, or would not be likely to have, the effect of substantially lessening competition in any market.
Mr Semenoff told the Advocate the Tomarata sand would mainly go to Auckland and also service the southern region of Northland.
"There will always be competition in the building materials market in Northland. This acquisition ensures income from Tomarata sand will go into pay packets in the North," he said.
Northern Advocate
