Godfrey Hirst Challenging Regulator Ruling

Auckland, New Zealand, June 10, 2011 -- Godfrey Hirst NZ, the country's biggest carpet manufacturer, is appealing antitrust regulator approval for the creation of a wool scouring monopoly.

The Australian carpet maker is appealing the Commerce Commission authorisation for Cavalier Wool Holdings to acquire the wool scouring assets of rival NZ Wool Services International, creating a New Zealand monopoly in wool processing services.

The regulator acknowledged that the formation of a monopoly may cause some price rises, but said the cost savings were too compelling to ignore.

The regulator said in a preliminary decision last month that the main threat to the local scouring industry was competition from China, and that allowed it to consider the creation of a local monopoly to give the domestic industry the size to compete.

Wool Services assets are available because its two biggest shareholders, Plum Duff Ltd. and Woolpak Holdings, with a combined 64% holding, are in receivership.

About 21% of New Zealand's wool exports are shipped to China in greasy form to be scoured there.