The Commission has indicated it will not block Cavalier Wool Holdings from buying the scouring operations as well as the other assets of New Zealand Wool Services International.
The Commission acknowledges the purchase would give Cavalier a monopoly on wool scouring in the country but says there are benefits that would outweight the loss of competition, such as lower production and administration costs.
Processor Godfrey Hirst, which has spinning and carpet making plants in New Zealand and Australia, uses Cavalier Wool Holdings' scours to have its wool cleaned.
The firm's New Zealand manager, Tania Pauling, says allowing its main competitor to control all scouring facilities is unacceptable.
Ms Pauling says Godfrey Hirst will be opposing the move when the Commerce Commission hears further submissions before making a final decision next month.