Copyright farmersweekly
Reading Time: 2 minutes Godfrey Hirst parent company Mohawk has applied to the Commerce Commission for clearance to purchase Bremworth carpet company. The commission has responded with a statement of preliminary issues in relation to Mohawk’s application. The principal concern is whether the proposed acquisition would be likely to substantially lessen competition in the relevant market. Godfrey Hirst submits that the market for floor coverings is much larger than just wool and synthetic carpets and that soft and hard flooring solutions should be considered in the same product market. “Customers can substitute timber, vinyl, lino, laminate, rugs and other floor coverings instead of carpet,” the commission says. “Nevertheless, the applicant submits that the real issue facing carpet manufacturers is that carpet sales volumes are declining.” The commission will consider whether the Godfrey Hirst approach to the market dimension is appropriate or perhaps define narrower markets. “We will consider whether soft flooring products should be assessed separately from hard flooring products and, further, whether wool carpet and synthetic carpet should be assessed separately from one another.” The commission is interested in the views of industry participants on the types of carpet manufacturing processes, the position of strong wool, how manufacturers can switch from wool to hard flooring and whether customers consider the market substitutionary. The commission will consider what would happen to Godfrey Hirst and Bremworth if the acquisition did not go ahead. Godfrey Hirst said approximately 50% of all carpet sold and installed in New Zealand comes from overseas and the merged entity would have efficiency gains and synergies that would benefit consumers. “Mohawk has a global reach with the resources needed to pursue research, design and innovation. “This is in contrast to Bremworth’s current size and its limited resources, which has resulted in it struggling to compete domestically with imported carpet as well as in export markets.” Submissions must be lodged by November 11 and the commission intends to report by December 22, subject to extension if necessary.
