The proposed acquisition of web offset printer Inkwise by rival Mainland Print in New Zealand is in limbo, as the Commerce Commission looks deeper into the implications of the deal for the nation's web printing.
The Commission says it needs more time than the statutory 40 days to investigate the Mainland Inkwise deal. Specifically, it is looking at whether the deal would give the company the ability to raise prices and/or reduce quality.
It is also looking at the possibility of price coordination, and is checking into “vertical effects by giving Allied Press (50 per cent owner of Mainland) the ability and incentive to foreclose competing newspaper publishers or raise their costs to render them less competitive in downstream reader and/or advertiser markets for daily and community newspapers”.
Mainland's attempt to buy Inkwise comes at a time when web printing in New Zealand is in the middle of a ferocious price war, as the main players chase volumes in a declining market.
In a letter to Mainland's lawyers, the Commission says, “At this stage we are not satisfied that the Proposed Acquisition would not substantially lessen competition due to 3.1 to 3.3 (the points above)."
It is concerned the proposed acquisition would reduce the number of coldset printers in the south island from three to two, with Stuff as the only rival to the new entity. It says it needs to check whether Stuff has the capacity to print the varying size coldset products that Mainland and Inkwise are capable of.
It is also concerned that it would leave effectively only two heatset web printers in the whole country: Ovato and the new operation, which would be a Blue Star company, as Blue Star half owns Mainland (the other half being owned by Allied Press).
Inkwise has some 80 staff; it was established in 1993 as Guardian Print in Ashburton, then became Inkwise in 2013 when it moved to Rolleston. It is 50 per cent owned by Bruice Bell, the owner and publisher of the Ashburton Guardian newspaper group. Mainland is a division of Allied Press and Webstar, which are part of the Tom Sturgess private equity-backed Blue Star Group.
The Commission has requested submissions from interested parties, which have to be in by June 11.