The Kiwi web offset market is consolidating, with the Commerce Commission just granting clearance for Mainland Print to acquire the heatset and coldset web offset printing assets of rival Inkwise.
The move effectively cuts the three heatset web offset printers in New Zealand down to two: Ovato (formerly PMP) and Blue Star (not the same Blue Star as in Australia). Blue Star owns half of Mainland, with Allied Press owning the other half. It also reduces to two the number of coldset printers in the South Island, with Stuff (formerly Fairfax) the only other one.
Mainland's acquisition of 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.
The green light came after the Commerce Commission had requested extra time to assess the deal and examine concerns it would give the company the ability to raise prices and/or reduce quality.
It was also looking at the possibility of price coordination, and 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”.
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 Bruce 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, created when Champ p/e pulled out of print.
Commission chair Anna Rawlings said the Commission is satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.
“We consider that the presence of a major competing supplier in each market with significant excess capacity is likely to constrain the ability of Mainland, and its shareholders, to raise prices, reduce service quality or foreclose downstream publishers,” Rawlings said.
“In addition, we considered whether the acquisition could affect competition by enabling Mainland to coordinate with its competitors. However, we are satisfied on the evidence before us that the market is currently delivering competitive outcomes and that the proposed acquisition is not likely to substantially change that situation.”