Alderson Logistics and Supa Shavings fined $420k over illegal acquisitions

Commerce Commission chair Dr John Small.

Alderson Logistics Limited and associated company Supa Shavings (2022) Limited have been ordered to pay a $420,000 penalty for failing to notify the Commerce Commission of acquisitions that substantially lessened competition.

Commerce Commission chair Dr John Small said the outcome serves as an important reminder that acquisitions of this nature are illegal in New Zealand.

“The Commerce Act is clear – in New Zealand, a person or business must not acquire assets of another business or shares if the effect, or likely effect, is a substantial lessening of competition in a market,” Small said.

In May 2022, Alderson Logistics and Supa Shavings (2022) acquired the assets of ABS Carriers Limited and Supa Shavings Limited.

Those companies supplied wood shavings, used for animal bedding, to chicken and goat farmers in the Waikato region.

Pre-acquisition, ABS Carriers and Supa Shavings were the largest suppliers of bulk wood shavings in the region with a combined market share of at least 70-80%.

“The companies were each other’s closest competitors and, when those assets were acquired, that competition was eliminated,” Small said.

“The commission was not notified about the acquisition, so this case is an important reminder that while our clearance regime is voluntary, we can take action against mergers or acquisitions where clearance was not sought.”

In her judgement, Justice Dani Gardiner said Alderson and Supa Shavings (2022) accepted that they gained commercially from the acquisitions for around 13 months, until a shavings supply shock in June 2023 affected their profitability from that date.

The companies also accepted that, up until around November 2024, other suppliers in the same markets supplied on an ad hoc basis only, had small market share and did not constrain Alderson and Supa Shavings (2022) in those markets - “including from increasing prices above competitive levels.”

Gardiner said the companies could not point to their lack of profitability to establish that they had not gained from the acquisitions without undertaking an analysis of what their profit would have been if had they had not occurred and competition continued.

Small said its vital businesses understand their obligations under the Commerce Act.

“Businesses should also give due consideration to whether a transaction ought to be flagged with the commission.”