Small said Kegstar and Konvoy competed closely.
“Our investigation showed that there are no existing competitors that could constrain the merged entity, and that entry from a new competitor is unlikely.
“We were not satisfied that the ability of some customers to self-supply instead of using PPF services would be sufficient to prevent an exercise of market power by the merged entity.“
He said the commission could not rule out the chances a merged entity would cause price rises for customers.
But Konvoy has been in trouble for months.
“Competition is obviously an important element in keeping costs low for brewers and therefore hospitality venues,” said Sam MacKinnon, Hospitality NZ head of communications and advocacy.
“While we can understand the rationale to not approve a merger, the flipside of that risk is that Konvoy can no longer operate and we’re still left with a single keg pay-per-fill supplier,” he added.
“We’re hopeful a buyer for Konvoy will eventuate, ensuring consistent availability of pay-per-fill kegs and competition in the market, maintaining affordability for brewers and venues.”
The Brewers Association said it respected the decision, and the role of the Commerce Commission in keeping markets competitive.
“For brewers, keg logistics is one of those often unseen but critical bits of infrastructure,” the association’s executive director, Dylan Firth, told the Herald.
“It’s not a hugely surprising outcome given the Australian regulator landed in a similar place,” he added.
“We’d want to see Konvoy, or at least its keg pool, remain available to New Zealand brewers. The last thing the sector needs is less supply and the impact of those costs flowing through.
“Competition matters here because it’s a pretty concentrated space.
“We’re not getting into individual commercial decisions, but the focus has to be on making sure brewers of all sizes have practical, cost-effective options.”
Konvoy was placed into receivership in March last year and into liquidation in late May.
It was clear by last August that Kegstar wanted to acquire Konvoy.
A decision was expected in September but was pushed back to December, then delayed again.
The commission said it sought several extensions of time from Kegstar.
It said that was because the merging parties had not shown the proposed acquisition would not substantially lessen competition.
“In each case, the applicant agreed to the requested extension.”
The Australian Competition & Consumer Commission (ACCC) is also investigating the proposed acquisition.
The ACCC in October said it would oppose the bid to take over Konvoy.
Kegstar owns kegs, delivers empty kegs to breweries for filling, tracks full kegs from breweries to licensed venues, collects empty kegs from venues and is responsible for keg maintenance and storage.
Kegstar’s owner is MicroStar Logistics, a US keg services business operating across Australia, New Zealand, Europe and the US.
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