Northern port merger in doubt

Once aggressive North Island competitors, the two ports are currently discussing the formation of a company which would have a NZ$1.5bn (US$1bn) market capitalisation and dominate the local port scene.

However, several competition lawyers have recently expressed doubts the Commerce Commission will be convinced the benefits of a merger would outweigh the loss of competition.

If the Commerce Commission does not give its blessing, a merger proposal would then require the New Zealand Government to pass legislation to proceed. Meanwhile, management of both Lyttelton Port of Christchurch (LPC) and Port Otago remain tight-lipped over whether they have officially entered into merger discussions.

Relationships between the two South Island ports were strained last year when Port Otago acquired a stake in LPC to block the latter’s partnership plans with overseas company, Hutchison Port Holdings.

However, the chairpersons of both ports have recently made positive murmurings about the need for port rationalisation and rumours have circulated that relations have thawed.