The Commerce Commission has given initial approval for wool processor and carpet manufacturer Cavalier Wool Holdings to buy New Zealand Wool Services International wool scouring assets.
In a preliminary opinion, the Commission acknowledges the purchase would give Cavalier a monopoly on wool scouring in the country but says the benefits in terms of lower production and administration costs would outweigh the loss of competition.
It says any detriment to competition resulting from the purchase is likely to be limited by the ongoing, long-term competitive threat of the Chinese wool scouring industry.
The Commission is seeking submissions on its draft decision and expects to issue a final determination by the end of next month.
Wool Services has rejected Cavalier Wool Holdings approach for its scouring assets, but a controlling stake in Wool Services is up for sale as result of shareholder, Plum Duff, being put into receivership
