Most businesses lap up all and any positive coverage they can get, even hiring expensive creative agencies to pump out messages of market disruption and value for money.
Not PBT Couriers.
The courier business has rejected being categorised as the cheapest operator, a “disruptive influence” or “market-leading” by the Commerce Commission, which is probing whether PBT’s customer contracts can be sold to the state-owned mail carrier NZ Post.
The competition regulator revealed concerns about the deal in a statement of issues released in late February, saying it was “currently not satisfied that the proposed acquisition would not be likely to substantially lessen competition in one or more relevant markets”.
Among other things it said PBT’s standard weekday courier service was often cheaper than other brands, and because of its low prices and level of service its withdrawal from the market could qualify as the removal of a disruptive influence, possibly enabling NZ Post to profitably raise prices.
Not so, said PBT in a response to the commission’s statement of issues with a Chapman Tripp letterhead.
“As we read it, the theory runs that PBT offers market-leading pricing to some of its [redacted] customers (albeit with PBT having failed to grow share by attracting business from the tens of thousands of other customers served by rival firms),” PBT said.
The company said it acknowledged that testing theories of harm was an important part of the merger control process.
“But the commission can put the ‘disruptive influence’ proposition to one side because PBT is not a maverick influence keeping its rivals honest lest they lose share to such a vibrant upstart. [redacted] We do not believe completion can or would substantially lessen competition.”
On the claim that it was cheaper than rivals, based on submissions and conversations with courier market users, PBT said any such support was “regrettably, at the edge of its small customer base”.
“Moreover, the apparent support is not tied to a price/service offer sufficient to make PBT’s courier business [redacted] capable of winning market share in recent times.”
It said there was no basis for the regulator to say its prices were lower than its closest competitors, and any PBT customers canvassed would be biased towards PBT given they have chosen to use it.
It said its courier volumes had been stagnant for 10 years and denied having, as the Commerce Commission theorised, capacity constraints that prevented it from profitably expanding.
PBT said the on-record evidence was that “very few consumers purchase PBT’s courier services, preferring instead NZ Post, Freightways, Aramex, TGE and others’ offers”.
“If PBT really were a ‘disruptive influence in the market’ with a ‘market-leading’ offer then it would be doing a lot better than it actually is.”
NZ Post’s response to the Commerce Commission’s statement of issues said New Zealand had some of the lowest courier prices in the world, “That outcome is not by chance but is the result of a highly competitive and dynamic market, with multiple suppliers serving customers with differing offerings.”
It argued the proposed transaction would not change that level of competition in any material way, and would create a situation where NZ Post’s operational efficiencies would put downward pressure on prices over time.
The Commerce Commission expects to make a decision on the deal on April 30, after pushing its deadline out by 57 working days on top of the usual 40 business day timeline to clear mergers and acquisitions.
The Commerce Commission received six submissions on the proposed acquisition, all against or critical of the deal and the impact it would have on the courier market in New Zealand, particularly for the non-standard or difficult-to-deliver-sized parcel market, the quality of service available in the market and wider pricing.
