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No loose lips in Montana-Corbans deal

By Phil Boeyen, ShareChat Business News Editor

Thursday 7th September 2000

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Montana and Corbans are both keeping tight-lipped over the possible purchase of Corbans by the country's largest winemaker.

Negotiations are understood to be continuing between the two companies, and a decision could be announced by the end of next week.

The Commerce Commission yesterday gave its go ahead for the acquisition, saying Montana would not acquire or strengthen dominance in any market in New Zealand.

Commission chair, John Belgrave, says it considered the impact of the proposal in the national markets in several areas - the importation or production of red, white, sparkling and fortified wine for distribution, plus wine distribution and the supply of wine producing grapes.

The Commission concluded that a combined Montana/Corbans would have large market shares in all six markets but would be constrained by other factors and would not be dominant in any market.

It says in the four wine markets, barriers for existing competitors to expand are low, imports account for a substantial amount of domestic consumption and are continuing to grow, and the merged entity would face effective competition from Australian distributors and the larger remaining New Zealand companies. Barriers to new entry are also low.

It also says the three main supermarket chains have considerable buying power and can switch between suppliers.

Montana has said little about its bid, which was made public when it applied for the Commerce Commission clearance. A clearance protects an acquisition from court action under the Commerce Act. Corbans has also said little publicly about the sale process to date, and has not indicated if any parties other than Montana are interested.

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