Clearance for Goodman Fielder to acquire yoghurt business

Clearance granted for Goodman Fielder to acquire Lion’s yoghurt business

The Commerce Commission has granted clearance for Goodman Fielder to acquire the assets related to the manufacture and distribution of ‘Yoplait’ branded yoghurt in New Zealand from Lion.

In making its decision, the Commission focussed on the competition issues in the national market for ‘mainstream’ yoghurt – mass-produced plain or flavoured yoghurts that are typically sold in 1kg tubs or in six or 12-pack ‘pottles’ – and Greek or Greek-style yoghurts.

Chairman Dr Mark Berry said the Commission was satisfied the merger would not substantially lessen competition in the mainstream yoghurt market.

“Currently, the mainstream yoghurt market is supplied by Fonterra, Goodman Fielder and Lion under their respective brands Fresh ’n Fruity, Meadow Fresh and Yoplait. While the merger reduces the number of suppliers from three to two, we are satisfied that it would not be likely to substantially lessen competition,” Dr Berry said.

“Fonterra is the largest supplier of mainstream yoghurt products in New Zealand and would continue to hold the largest market share when the merger proceeds. We consider it is unlikely that Goodman Fielder would be able to raise its prices as a result of the merger given Fonterra competes strongly on price and would continue to do so.

“Further, nearly 90 percent of mainstream yoghurt is sold through supermarkets with the majority of products sold when on promotion. This means Foodstuffs and Woolworths hold significant buyer power and are able to take action to constrain or prevent price increases.”

Outside of the mainstream yoghurt market, the Commission considered that the presence of other suppliers and buyer power of the supermarkets meant the merger was unlikely to affect competition for gourmet, natural or Greek yoghurt products.

A copy of the Commission’s full reasons will be available on the clearances register in due course.

Background

Goodman Fielder New Zealand Limited
Goodman Fielder is a food company operating across New Zealand, Australia, and the Asia-Pacific region. Goodman Fielder is a subsidiary of Goodman Fielder Pty Limited, an Australian company, and is ultimately owned by Wilmar International and First Pacific through the Singapore-registered FPW Singapore Holdings Pte. Ltd.

In New Zealand, Goodman Fielder produces a range of dairy, bread, and grocery items, including yoghurt under the brands Meadow Fresh, Activate probiotic, Naturalea, Kalo, and Puhoi Valley. Under its various brands, Goodman Fielder produces a wide range of different types of yoghurt products in a range of pack sizes.

Lion – Dairy & Drinks (NZ) Limited
Lion is a food and beverage company in Australia and New Zealand ultimately owned by Kirin Holdings Company Limited, a multinational food and beverage company headquartered in Japan. Lion’s New Zealand business includes alcoholic and non-alcoholic beverages including dairy drinks, and the manufacture and distribution of yoghurt under the Yoplait brand. Similar to Goodman Fielder, Lion produces a range of different types of Yoplait-branded yoghurt products in an assortment of different pack sizes.

Lion manufactures and distributes Yoplait branded yoghurt in New Zealand under an Australasian licence agreement with Sodima, a French company that owns and licences the Yoplait brand worldwide. Lion intends to terminate the New Zealand aspects of this licence at the same time as the acquisition occurs, retaining the Yoplait licence for Australia and other territories covered by the current licence.

Merger clearance process
When considering a proposed merger, the Commission must determine whether any competition that would be lost with the merger would be substantial. For more information on the Commission's role in assessing merger applications see our website.

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