NZ commerce watchdog still studying tobacco merger (fwd)

[Robert Weissman <rob@essential.org>]

NZ commerce watchdog still studying tobacco merger

by NEW ZEALAND; Source: Reuters, Saturday, 8/7/99


Saturday August 7, 11:04 pm Eastern Time

WELLINGTON, Aug 8 (Reuters) - The New Zealand Commerce Commission said on
Sunday it was continuing to investigate domestic competition issues
surrounding the global merger between British American Tobacco (BAT)
(quote from Yahoo! UK & Ireland: BATS.L) and Rothmans International ,
despite their divestment plans.

The competition watchdog said in January it would look into the merger --
completed in June to form the world's second largest cigarette company --
as their combined share in New Zealand would be in excess of 96 percent.

``Our view is that it appears that BAT and Rothmans are not divesting
enough assets to prevent dominance,'' Commission Acting Chairman Mark
Berry said, referring to BAT and Rothmans plans to sell tobacco brands and
a cigarette factory to Britain's Imperial Tobacco Plc (quote from Yahoo!
UK & Ireland: IMT.L).

``We are not concerned that Imperial is entering the New Zealand market by
acquiring assets from BAT and Rothmans and we will not take action against
Imperial's proposed acquisitions,'' Barry said in a statement.

In an effort to win approval from Australia's competition watchdog,
Rothmans and BAT offshoots -- Rothmans Holdings Ltd and W.D. & H.O. Wills
Holdings Ltd -- had agreed to sell some key brands in Australia and New
Zealand to Imperial Tobacco.

The revised merger plan was cleared by the Australian Competition and
Consumer Commission in June.

Based on figures to March 31, 1999, the divestment would see BAT having a
79.2 percent share in the New Zealand market, followed by Imperial at 16.1
percent and Phillip Morris (NYSE:MO - news) at 4.7 percent.

The commission's Berry said that BAT, W.D. & H.O. Wills (NZ) Ltd and the
three Rothmans companies involved have all signed a legally enforceable
Deed, which included undertakings that the assets would not be merged into
the joint BAT/Rothmans.

"The Deed does not prevent the sale of assets to Imperial or any other
company independent of BAT or Rothmans.

``The Deed will remain in force until either the Commission or a court has
confirmed that the merged BAT/Rothmans would not be dominant in any market
in New Zealand.''

A Commerce Commission spokesman said he could not give a time frame as to
when the decision would likely be made.