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Select Topics
Relevant legislation and authorities
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  1. Is a merger control regulation in force?
  1. Which authorities enforce the merger control regulation?
  1. Relevant regulations and guidelines with links:
  1. Does general competition regulation apply to mergers or ancillary restrictions?
  1. May an authority order a split-up of a business irrespective of a merger?
  1. Other authorities that also require merger filing or may prohibit transaction
    (Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)
  1. Are any parts of the territory exempted or covered by particular regulation?
Voluntary or mandatory filing
show/hide chapter
  1. Is merger filing mandatory or voluntary?
Types of transactions to file – what constitutes a merger
show/hide chapter
  1. Is there a general definition of transactions subject to merger control?
  1. Is "change of control" of a business required?
  1. How is "control" defined?
  1. Acquisition of a minority interest
  1. Joint ventures/joint control – which transactions constitute mergers?
Thresholds that decide whether a merger notification must be filed
show/hide chapter
  1. Which thresholds decide whether a merger notification must be filed?
  1. Special thresholds for particular businesses
  1. Rules on calculation and geographical allocation of turnover
  1. Special rules on calculation of turnover for particular businesses
  1. Series of transactions that must be treated as one transaction
Exempted transactions and industries (no merger control even if thresholds ARE met)
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  1. Temporary change of control
  1. Special industries, owners or types of transactions
  1. Transactions involving only foreign businesses (foreign-to-foreign)
  1. No overlap of activities of the parties
  1. Other exemptions from notification duty even if thresholds ARE met?
Merger control even if thresholds are NOT met
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  1. May a merging party file voluntarily even if the thresholds are not exceeded?
  1. May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?
Referral to and from other authorities
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  1. Referral within the jurisdiction
  1. Referral from another jurisdiction
  1. Referral to another jurisdiction
  1. May the merging parties request or oppose a referral decision?
Filing requirements and fees
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  1. Stage of transaction when notification must be filed
  1. Pre-notification consultations
  1. Special rules for acquisitions on stock exchanges and public takeover bids
  1. Forms available for completing a notification
  1. Languages that may be applied in notifications and communication
  1. Documents that must be supplied with notification
  1. Filing fees
Implementation of merger before approval – "gun jumping" and "carve out"
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  1. Is implementation of the merger before approval prohibited?
  1. May the parties get permission to implement before approval?
  1. Due diligence and other preparatory steps
  1. Veto rights before closing and “Ordinary course of business” clauses
  1. Implementation outside the jurisdiction before approval – "Carve out"
  1. Consequences of implementing without approval/permission
The process – phases and deadlines
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  1. Phases and deadlines
Assessment and remedies/decisions
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  1. Tests or criteria applied when a merger is assessed
  1. May any non-competition issues be considered?
  1. Special tests or criteria applicable for joint ventures
  1. Decisions and remedies/commitments available
Publicity and access to the file
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  1. How and when will details about the merger be published?
  1. Access to the file for the merging parties and third parties
Judicial review
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  1. Who can appeal and what may be appealed?

 
NEW ZEALAND

Sarah Keene
Partner

sarah.keene@russellmcveagh.com

Tel: D +64 9 367 8133 M +64 27 535 5034

Troy Pilkington
Partner

troy.pilkington@russellmcveagh.com

Tel: D +64 9 367 8108 M +64 21 110 9558

Bradley Aburn
Senior Associate

bradley.aburn@russellmcveagh.com

Tel: D +64 9 367 8816 M +64 27 360 3413

Sam Holmes
Senior Solicitor

samuel.holmes@russellmcveagh.com

Tel: D +64 9 367 8077

No new regulation adopted or proposed

Note that relevant regulations may be changed before your contemplated transaction is completed. Mergerfilers.com and our national experts keep information on regulations up to date and even provide alerts on adopted or proposed changes that have not come into force yet but may come into effect before the transaction is completed. When this field is green, we have no knowledge of such imminent changes to the relevant regulations.
Relevant legislation and authorities

1) Is a merger control regulation in force?

Yes. Merger control regulation is contained in Part 3 of the Commerce Act 1986.

2) Which authorities enforce the merger control regulation?

The New Zealand Commerce Commission enforces the Commerce Act including the merger regulation contained therein. 

Decisions of the New Zealand Commerce Commission may be appealed to the New Zealand High Court, and further, with leave, to the Court of Appeal and Supreme Court.

3) Relevant regulations and guidelines with links:

The merger regulation is contained in Part 3 of the Commerce Act. Links to the relevant legislation, guidelines and forms are listed here:

Official English version

Commerce Act 1986

Mergers & Acquisitions Guidelines

Application form (including a declaration that all relevant information has been supplied as well as confidentiality waivers)

4) Does general competition regulation apply to mergers or ancillary restrictions?

New Zealand's merger control regime only applies to the acquisition of assets of a business or shares.  Such acquisitions areassessed by reference to the merger control test rather than the restrictive trade practices prohibitions.  However, if an otherwise illegal restrictive provision is included in merger agreements, that restrictive provision will be assessed under New Zealand's restrictive trade practices prohibitions. 

However, there is an exception from the restrictive trade practices prohibitions for covenants in business acquisition agreements that are "solely for the protection of the purchaser in respect of the good of the business". This provides an exception for restraints imposed on vendors that are reasonable in scope and duration to protect the goodwill being acquired. There is no clear dividing line between covenants that are reasonable, and those that are excessive, and a view needs to be taken on a case-by-case basis depending on the nature of the business being acquired, the goodwill associated with the business, and the purchase price.

5) May an authority order a split-up of a business irrespective of a merger?

No.

6) Other authorities that also require merger filing or may prohibit transaction
(Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)

Mergers by 'overseas persons' affecting certain New Zealand business assets or land may be subject to regulatory control under the Overseas Investment Act 2005, and the Overseas Investment Regulations 2005. Under this regime, the consent of the Overseas Investment Office will be required in respect of transactions which result in overseas investments in 'significant business assets' or 'sensitive land' in New Zealand.

Consent will also be required under the Fisheries Act 1996 for a transaction that will result in an overseas investment in fishing quota.

An 'overseas person' is defined as:

  • an individual who is neither a New Zealand citizen nor ordinarily resident in New Zealand;
  • a body corporate incorporated outside New Zealand, or a 25% or more subsidiary of a body corporate incorporated outside New Zealand;
  • a body corporate where overseas persons have 25% or more of any class of securities, or the power to control 25% or more of the governing body, or the right to exercise or control 25% or more of the voting rights;
  • a partnership, or unincorporated joint venture or other unincorporated body of persons (other than a trust or unit trust) where 25% or more partners or members are overseas persons, or overseas persons have a beneficial interest or entitlement to 25% or more of its profits or assets, or the right to exercise or control 25% or more of the voting rights; or
  • a trust where 25% or more of the governing body are overseas persons, 25% or more of the persons having the right to amend, or control the amendment of the trust deed, or control the composition of the governing body, are overseas persons, or overseas persons have a beneficial interest or entitlement to 25% or more of the trust property; or 
  • a unit trust where the manager or trustee, or both, are overseas persons respectively, or overseas persons have a beneficial interest or entitlement to 25% or more of the trust property.

7) Are any parts of the territory exempted or covered by particular regulation?

No.

Voluntary or mandatory filing

8) Is merger filing mandatory or voluntary?

Merger filing in New Zealand is voluntary (however, it is illegal to make an acquisition that substantially lessens competition in a market in New Zealand without first obtaining approval from the Commerce Commission).

Types of transactions to file – what constitutes a merger

9) Is there a general definition of transactions subject to merger control?

New Zealand's merger control regime only applies to the acquisition of "assets of a business" or shares.  The phrase “assets of a business” is not defined in the Commerce Act and, therefore, potentially can include any asset owned by a business.  The Commerce Commission's approach does not change in situations where a party is only acquiring certain assets of a business.  The Commerce Commission will still consider whether the acquisition of those assets could have the effect or likely effect of substantially lessening competition.  For such an effect to arise, it is typically necessary for the acquisition to involve the transfer of assets that are sufficient in scope to be "capable of being operated independently to create a trading activity".  The transfer of the benefit of the operation (i.e. goodwill), the ability to engage in activities (e.g. licenses), the transfer of intellectual property which is recognized by customers (e.g. trademarks), or a vendor's obligation to ensure the new business owners can maintain its customers and knowledge base (e.g. transfer of know-how or customer lists) are all factors that are indicative of a transfer of trading activity that would be subject to the merger control regime.     

10) Is "change of control" of a business required?

Change of control is not required for an acquisition of assets of a business or shares, to be subject to New Zealand's merger control regime. However, change of control is relevant in the context of special rules (in section 47A-D of the Commerce Act) that apply to acquisitions by overseas persons of a controlling interest in a New Zealand body corporate through the acquisition outside of New Zealand of assets of a business or shares.  (See further topic 21 below). 

11) How is “control” defined?

There is no definition of "control" for New Zealand's general merger control.  Rather, the Commerce Act simply considers whether the acquisition of "assets of a business" or shares is capable of having the effect or likely effect of substantially lessening competition in a market (irrespective of whether that is a controlling or minority interest).

For the purposes of the more specific regime in sections 47A-D of the Commerce Act, which applies to acquisitions by overseas persons outside New Zealand, a "controlling interest" is defined to be control of the board or 20% of the voting rights, issued shares or dividend entitlements. 

12) Acquisition of a minority interest

Minority interests are also caught by the merger control rules. 

13) Joint ventures/joint control – which transactions constitute mergers?

There is no special substantive test for joint ventures. However, only joint ventures which involve the acquisition of business assets or shares will be assessed under the merger control regime. 

Other aspects of a joint venture relationship, such as ongoing collaboration through the joint venture, are analysed pursuant to Part II of the Commerce Act, which deals with restrictive trade practices generally. The Part II provisions can be highly technical in their application to joint ventures so legal advice is recommended in cases of non-structural joint ventures. 

Thresholds that decide whether a merger notification must be filed

14) Which thresholds decide whether a merger notification must be filed?

a) Turnover thresholds

There are no thresholds for determining filing in New Zealand. The merger control regime is voluntary, and it is entirely up to the merging parties as to whether they file notification (subject to the caveat that it is illegal to make an acquisition that substantially lessens competition in a market in New Zealand without first obtaining approval from the Commerce Commission).

b) Market share thresholds

There are no thresholds for determining filing in New Zealand. The merger control regime is voluntary, and it is entirely up to the merging parties as to whether they file notification (subject to the caveat that it is illegal to make an acquisition that substantially lessens competition in a market in New Zealand without first obtaining approval from the Commerce Commission).

By way of guidance, the New Zealand Commerce Commission has two indicators where it considers a merger is less likely to raise competition concerns, therefore notification is less likely to be advisable: 

  1. where post-merger the three largest firms in the market have a combined market share of less than 70%, and the merged firm’s market share is less than 40%; and/or 
  2. where post-merger the three largest firms in the market have a combined market share of 70% or more, and the merged firm’s market share is less than 20%.

However, these are merely indicators rather than formal safe harbours.

c) Value of transaction thresholds

There are no thresholds for determining filing in New Zealand. The merger control regime is voluntary, and it is entirely up to the merging parties as to whether they file notification (subject to the caveat that it is illegal to make an acquisition that substantially lessens competition in a market in New Zealand without first obtaining approval from the Commerce Commission).

d) Assets requirements

There are no thresholds for determining filing in New Zealand. The merger control regime is voluntary, and it is entirely up to the merging parties as to whether they file notification (subject to the caveat that it is illegal to make an acquisition that substantially lessens competition in a market in New Zealand without first obtaining approval from the Commerce Commission).

e) Other

There are no thresholds for determining filing in New Zealand. The merger control regime is voluntary, and it is entirely up to the merging parties as to whether they file notification (subject to the caveat that it is illegal to make an acquisition that substantially lessens competition in a market in New Zealand without first obtaining approval from the Commerce Commission).

15) Special thresholds for particular businesses

N/A

16) Rules on calculation and geographical allocation of turnover

N/A

17) Special rules on calculation of turnover for particular businesses

N/A

18) Series of transactions that must be treated as one transaction

All mergers are assessed on a case-by-case basis, as and when they occur, and evaluated independently of each other (albeit that one potential transaction could impact the Commerce Commission's assessment of the competitive effect of another potential transaction – for example, if both transactions have impacts on the same or related markets). 

Exempted transactions and industries (no merger control even if thresholds ARE met)

19) Temporary change of control

Mergers are assessed only on the basis of whether they are likely to substantially lessen competition in a market in New Zealand. For a lessening of competition to be regarded as substantial, the New Zealand Commerce Commission has previously noted that the market impact has to be material and able to be sustained for a material period (often referred to as a period of at least two years).  Temporary changes of control are unlikely to meet this threshold. 

20) Special industries, owners or types of transactions

There are no such exemptions. All mergers are subject to analysis on the basis of whether they are likely to substantially lessen competition in a market. 

21) Transactions involving only foreign businesses (foreign-to-foreign)

Pure foreign-to-foreign mergers with no impact on a market in New Zealand will be outside of the New Zealand Commerce Commission's jurisdiction.

No business is obligated to notify the New Zealand Commerce Commission, foreign or otherwise. Foreign businesses engaging in a merger may wish to notify the New Zealand Commerce Commission if they consider there is a risk that the merger will substantially lessen competition in a New Zealand market. 

Although the New Zealand Commerce Commission's jurisdiction is limited to New Zealand, under section 47A of the Commerce Act 1986 the New Zealand Commerce Commission may apply to the High Court for a declaration where it considers that an "overseas person" has (directly or indirectly) acquired a controlling interest in a New Zealand body corporate. 'Controlling interest' is defined to be control of the board or 20% of the voting rights, issued shares or dividend entitlements. An overseas person means either an individual or body corporate who is neither resident nor carrying on business in New Zealand. The declaration may be granted where the Court considers such an acquisition of that controlling interest has, or is likely to have, the effect of substantially lessening competition in a market in New Zealand. 

The granting of a declaration allows the New Zealand Commerce Commission to apply to the High Court for an order requiring the New Zealand body corporate in which the overseas person has acquired the controlling interest to: i) cease carrying on business in New Zealand; ii) dispose of shares or other assets specified by the court; or ii) take any other action that the High Court considers is consistent with the purpose of the Commerce Act.

22) No overlap of activities of the parties

There is no exemption for mergers between parties that do not have overlapping activities.  The New Zealand Commerce Commission have previously investigated mergers between firms operating at different levels of the supply chain or whom supply different, albeit related, products (e.g. a conglomerate merger).

23) Other exemptions from notification duty even if thresholds ARE met?

There are no thresholds and New Zealand's merger control regime is voluntary. It is up to the merging parties whether to file a merger notification with the New Zealand Commerce Commission (subject to the caveat that it is illegal to make an acquisition that substantially lessens competition in a market in New Zealand without first obtaining approval from the Commerce Commission). 

Merger control even if thresholds are NOT met

24) May a merging party file voluntarily even if the thresholds are not exceeded?

New Zealand's merger control regime is voluntary. Therefore, a merging party can choose to notify the New Zealand Commerce Commission of any transaction. 

25) May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?

New Zealand's merger control regime is voluntary.  The New Zealand Commerce Commission cannot require parties to apply for clearance.  The New Zealand Commerce Commission can oppose any acquisition of assets of a business or shares if it has formed the view that it is likely to have the effect of substantially lessening competition in a market in New Zealand (see further topic 44 below).   

Referral to and from other authorities

26) Referral within the jurisdiction

N/A

27) Referral from another jurisdiction

N/A

28) Referral to another jurisdiction

N/A

29) May the merging parties request or oppose a referral decision?

N/A

Filing requirements and fees

30) Stage of transaction when notification must be filed

There is no specific deadline, but if merging parties choose to file, a merger notification must be filed before an unconditional agreement has been concluded. Specifically, the agreement must be conditional on obtaining clearance from the New Zealand Commerce Commission (either expressly or as part of a global condition), as the New Zealand Commerce Commission has consistently held (albeit that there is no precedent on the matter) that it does not have power to grant clearance for a merger (even if not completed) that is not conditional upon receiving clearance.

31) Pre-notification consultations

The New Zealand Commerce Commission encourages pre-notification consultations. The New Zealand Commerce Commission expects a substantially developed draft application to be provided, alongside supporting documents, at least a week prior to pre-notification consultations. The main purpose of a pre-notification consultation and provision of a draft application is to expedite the consideration of an application for clearance if and when it is filed by informing the New Zealand Commerce Commission of any complex/unfamiliar markets, clarifying what information and evidence the New Zealand Commerce Commission is likely to require and reducing the need for further information requests and extensions. 

The deadlines for the New Zealand Commerce Commission's investigation will only start to run from the formal submission, but it is normally advisable not to formally submit the notification before the New Zealand Commerce Commission has invited the parties to do so.

32) Special rules on timing of notification in case of public takeover bids and acquisitions on stock exchanges

There are no special rules in relation to public takeover bids or acquisitions on stock exchanges. Public takeover bids (implemented either as takeovers or via a scheme of arrangement) can be made conditional on New Zealand Commerce Commission clearance.  

33) Forms available for completing a notification

Applications for clearance must include the information set out in the New Zealand Commerce Commission's prescribed application form

34) Languages that may be applied in notifications and communication

English or Te Reo Māori.

35) Documents that must be supplied with notification

The following documents should always be supplied with a merger notification:

  1. the final or most recent versions of any documents bringing about the merger, such as the sale and purchase agreement (draft or executed version) and ancillary agreements;
  2. documentation in the applicant's possession which has been prepared for, seen or considered by senior management or the board of directors and; either (i) sets out the rationale for the merger, assesses or analyses the merger with respect to competitive conditions, competitors, potential for sales growth or expansion; or (ii) within the last two years, sets out the competitive conditions, market conditions, market shares, competitors or the applicants business plans in relation to the relevant products or services;
  3. copies of or links to the merging parties' most recent annual reports, audited financial statements and management accounts;
  4. group chart/overview for each of the parties to the merger;
  5. contact information for the parties' key competitors, suppliers and customers;
  6. a non-confidential version of the notification (to be published on the New Zealand Commerce Commission website); and
  7. proof of payment of the applicable filing fee.

36) Filing fees

The filing fee for merger clearances is NZD $3,680, including GST.  The filing fee for merger authorisations is NZD $36,800, including GST.  

Implementation of merger before approval – “gun jumping” and “carve out”

37) Is implementation of the merger before approval prohibited?

No, as New Zealand's merger control regime is voluntary and parties do not have to apply for clearance. However, if parties proceed with implementation without obtaining clearance or authorisation and the New Zealand Commerce Commission considers that the merger is likely to substantially lessen competition, the parties risk the merger being investigated and potentially unwound, in addition to pecuniary penalties.

38) May the parties get permission to implement before approval?

If the merging parties choose to file for approval (either clearance or authorisation) from the New Zealand Commerce Commission, they legally remain free to implement the merger whenever they wish to, even prior to obtaining approval, provided the acquisition does not have the effect or likely effect of substantially lessening competition in a market. However, the New Zealand Commerce Commission considers that it only has power to grant approval prior to implementation; if mergers are implemented before approval is given, the New Zealand Commerce Commission considers the application withdrawn and will not make a determination. If the New Zealand Commerce Commission considered there was a substantive issue concerning the merger, it would need to seek injunctive relief or bring proceedings against the parties in the High Court.   

39) Due diligence and other preparatory steps

The New Zealand Commerce Commission's position is that, while parties to proposed mergers must naturally engage with each other to explore the merits of a merger prior to binding themselves and consummating a deal, pre-merger discussions can give rise to competition law concerns if the parties exchange competitively sensitive information through negotiations without appropriate protections in place, which may "be used to dampen continuing competition between them". The New Zealand Commerce Commission's view is that detailed knowledge of a competitor's pricing, costs, strategic plans and other core material can hamper the competitive dynamic, especially in markets where the parties to a proposed merger are each other's closest competitors or where the information exchanged can be used readily with long term anticompetitive consequences. 

Furthermore, the New Zealand Commerce Commission may have concerns if the parties agree that one party will cede control over pricing decisions to the other, or reach an agreement not to compete for each other's customers in the period before completion. The New Zealand Commerce Commission views such conduct as cartel conduct. 

40) Veto rights before closing and "Ordinary course of business" clauses

An "ordinary course of business" clause that prevents the target company from taking decisions outside the course of its ordinary business until the closing date is generally considered acceptable.

However, it must be assessed on a case-by-case basis to what extent the parties may discuss – or provide each other with veto rights concerning – any decisions in their respective businesses.  Clauses aimed at preserving the target's value are generally acceptable, however ordinary course of business clauses should not be drafted in a manner that is too specific, and should not oblige either party to obtain approval for ordinary commercial conduct. 

41) Implementation outside the jurisdiction before approval – "Carve out"

The New Zealand Commerce Commission considers that it only has the jurisdiction to grant approval for mergers that have not been completed and that remain conditional upon receipt of such approval.  Depending on the nature of the merger and the business operations, it may be possible to structure the merger to "carve out" the New Zealand business pending receipt of New Zealand approval.  Parties are advised to discuss any potential "carve out" with the New Zealand Commerce Commission as early as possible to prevent a situation where the New Zealand Commerce Commission forms the view that the merger has already been implemented such that it no longer has the jurisdiction to grant approval.  

42) Consequences of implementing without approval/permission

Due to New Zealand's voluntary notification regime there is no penalty for failing to notify.

However, if the parties do not notify the New Zealand Commerce Commission and the New Zealand Commerce Commission subsequently forms the view that the acquisition does give rise to competition issues, it can bring proceedings against the parties and seek pecuniary penalties in the High Court.  In addition, the New Zealand Commerce Commission can seek to have the merger unwound; if this remedy is granted by the Court, parties can be forced to divest the assets/business.  

The process – phases and deadlines

43) Phases and deadlines

New Zealand's merger control regime does not have clearly delineated phases, however the New Zealand Commerce Commission provides the following timetable for the clearance process as a guide (see topic 45 with respect to authorisation applications). Although the New Zealand Commerce Commission has a statutory timeframe of 40 working days in which to make an initial determination of a clearance application, it almost invariably seeks an extension to this timeframe from merging parties. If merging parties do not agree to an extension, the New Zealand Commerce Commission can simply fail to make a determination within the 40 working day timeframe, after which the merger is deemed to be declined. It is therefore in the interests of merging parties to grant requests for extension. 

The Commerce Act 1986 defines a "working day" as any day of the week other than Saturday, Sunday, Good Friday, Easter Monday, Anzac Day (25 April), Labour Day (the last Monday of October) the Sovereign's birthday (the first Monday in June) and Waitangi Day (6 February) and any day in the period commencing 25 December and ending 15 January the following year. 

Phase

Duration/deadline

Pre-Notification

At least 1 week before clearance application:

Notify the New Zealand Commerce Commission of pending application and commence informal pre-notification discussions

No set duration or deadline

Preliminary matters

Application for clearance registered (working day 1)

The New Zealand Commerce Commission provides a draft investigation timeline (by working day 5)

The New Zealand Commerce Commission publishes a Statement of Preliminary Issues on its public website (by working day 5)

Third party submissions due on the Statement of Preliminary Issues (by working day 15)

Working day 1 - 15

Initial Investigation

Initial interviews and information gathering completed (by working day 30)

The New Zealand Commerce Commissiondecides to either: (by working day 40)

  • Grant clearance (or grant clearance subject to conditions); 
  • Decline to grant clearance (or fail to make a decision without approval of an extension, in which case the application is deemed declined); or
  • Send a Statement of Issues to the applicant

Working day 15 - 40

Extension:
In practice the New Zealand Commerce Commission invariably seeks extensions for clearance applications. If applicants do not agree to such an extension, it is open to the New Zealand Commerce Commission to simply fail to make a determination in the prescribed time, in which case the application is deemed to have been declined. This means that the merging parties, in practice, always agree to reasonable extensions sought by the New Zealand Commerce Commission.

The New Zealand Commerce Commission is highly unlikely to decline to grant clearance at this stage of the investigation. They are more likely to seek an extension from the parties and send a Statement of Issues to give the parties an opportunity to submit further evidence to resolve the preliminary concerns identified. 

Further Investigation

Statement of Issues sent and published online (by working day 50)

If the New Zealand Commerce Commission expresses serious concerns about the merger, it is important that the parties enter into negotiations of possible commitments well before the expiry of the deadlines (see topic 47 regarding remedies/commitments)

Submissions from all interested parties including the merging parties due on Statement of Issues (by working day 60; third parties have an additional 5 working days to make submissions on the merging parties' response(s))

The New Zealand Commerce Commission meets the applicant to discuss issues (by working day 70)

The New Zealand Commerce Commission decides to either: (by working day 90)

  • Grant clearance (or grant clearance subject to conditions); 
  • Decline to grant clearance (or fail to make a decision without approval of an extension, in which case the application is deemed declined); or
  • Send a Statement of Unresolved Issues

Working day 40 – 90

Further Investigation

Statement of Unresolved Issues sent and published online (by working day 100)

Submissions from all interested parties including the merging parties due on Statement of Unresolved Issues (by working day 110; third parties have an additional 5 working days to make submissions on the merging parties' response(s))

The New Zealand Commerce Commission meets with the applicant to discuss unresolved issues (by working day 120)

The New Zealand Commerce Commission decides to either: (working day 130+)

  • Grant clearance (or grant clearance subject to conditions); or
  • Decline to grant clearance

Working day 90 – 130+

Assessment and remedies/decisions

44) Tests or criteria applied when a merger is assessed

In order to be granted clearance, the New Zealand Commerce Commission must be satisfied that the merger will not have, or would not be likely to have, the effect of substantially lessening competition in a market.

The New Zealand Commerce Commission assess a range of factors when deciding whether to approve a merger, including:

  • Unilateral effects: where a firm merges with a competitor that would otherwise act as a significant competitive constraint, such that the merged entity can profitably increase prices. These can occur in homogenous product markets, markets with differentiated products or markets where prices are determined through a bidding process;
  • Coordinated effects: where there is potential for the merged entity and some or all of its competitors to coordinate their actions and collectively exercise market power to either reduce output and / or increase prices. The New Zealand Commerce Commission will assess whether the relevant market(s) are vulnerable to such coordination;
  • Ease of entry and expansion; the likelihood, costs and time taken for firms to either enter into the market or expand existing operations;
  • Countervailing power; the ability of either buyers or suppliers to exert influence on negotiations with the merged entity. Countervailing power exists when a customer or supplier possess special characteristics that give it the ability to substantially influence the price charged by the merged entity for example, the ability to credibly threaten to switch suppliers;
  • Whether the target is likely to fail as an independent business (e.g. a failing firm defence); or
  • Whether there are efficiencies that are likely to outweigh any perceived loss of competition between the parties (e.g. an efficiencies defence – note that this is rarely, if ever, successful).

45) May any non-competition issues be considered?

No, the New Zealand Commerce Commission may not consider non-competition issues such as national security.

Non-competition issues are not relevant in the clearance context, however, for an authorisation application (where the parties submit that any lessening of competition is outweighed by public benefits resulting from the merger), the evaluation of public benefits may be extended from economic efficiencies to include anything of value to the community generally.

Parties to such mergers must apply to the New Zealand Commerce Commission in advance of entering into an unconditional agreement, as authorisation cannot be granted retrospectively.

The process is similar to applying for merger clearance; parties must file an application with the New Zealand Commerce Commission, which will assess whether the anti-competitive harms resulting from the merger are outweighed by public benefits. However, the New Zealand Commerce Commission publishes a draft determination following its initial investigation, after 40-50 working days which parties (including third parties) can make submissions on. A conference for interested parties is held if requested, or the New Zealand Commerce Commission considers the process will assist its investigations. A final determination is made after 70-80 working days. 

46) Special tests or criteria applicable for joint ventures

For structural (incorporated) joint ventures (see topic 13 above), the substantive assessment is the same as for other mergers. 

For non-structural joint ventures, the section 27 prohibition (anticompetitive agreements) and section 30 prohibition (cartel conduct) potentially apply as does the collaborative activities exception to cartel conduct under section 31. Section 27 prohibits parties from entering into contracts, arrangements or understandings that have the purpose, effect or likely effect of substantially lessening competition in a market, which includes non-structural joint ventures. Section 30 prohibits cartel agreements between competitors, specifically restrictions relating to price fixing, market allocation and output restriction. The collaborative activities exception is a defence which exempts cartel provisions that are reasonably necessary for the purpose of a collaborative activity, which is defined as an enterprise, venture or other activity, in trade, that is carried on by two or more persons and is not carried on for the dominant purpose of lessening competition between any two or more of the parties. 

47) Decisions and remedies/commitments available

The New Zealand Commerce Commission may either grant clearance unconditionally, grant clearance subject to conditions, or decline to grant clearance. In the event of a decline, it remains open to the parties to proceed with their merger, but in this case there is a substantial risk that the New Zealand Commerce Commission would seek an injunction to prevent the merger. 

If the New Zealand Commerce Commission expresses serious concerns about the merger, it is important that the parties enter into negotiations of possible commitments well before the expiry of the deadlines, as the New Zealand Commerce Commission will only consider an approval with conditions if the parties have offered commitments.

Commitments may only be structural, and merging parties typically have 12 months from the date approval (clearance) is granted to fulfil any commitment. 

The New Zealand Commerce Commission also has the power to accept structural divestment undertakings in relation to mergers even if the parties have not applied for clearance or authorisation.  This means that even if the parties have not sought clearance/authorisation they can undertake to divest assets or shares if it becomes apparent that the New Zealand Commerce Commission has concerns with the merger. 

If clearance is not sought, the New Zealand Commerce Commission can open an investigation within three years of the acquisition being declared unconditional.

If the New Zealand Commerce Commission concludes from its investigation that the merger breaches the Commerce Act, it must bring any proceedings for penalties within three years after the relevant acquisition. Proceedings seeking a forced divestment must be commenced within two years from the date of the relevant acquisition. There is no time limit on the New Zealand Commerce Commission for bringing proceedings for an injunction or other protective orders, although its ability to obtain such a discretionary order will naturally be limited by time.

Publicity and access to the file

48) How and when will details about the merger be published?

The New Zealand Commerce Commission will make a public announcement when it has received a merger notification (including publication of a non-confidential version of a clearance or authorisation application) and again when a decision has been taken. The latter announcement will include a non-confidential version of the decision. The level of detail of decisions varies considerably. The New Zealand Commerce Commission also announces and publishes its Statement of Preliminary Issues shortly after the merger notification is received and, if required, its Statement of Issues and/or Statement of Unresolved Issues (see topic 43). 

The parties will generally be informed ahead of any announcements being made, and may receive a general indication as to content, but otherwise do not coordinate the messaging with the New Zealand Commerce Commission. To protect business secrets, the parties are requested to provide a non-confidential description of the merger with the notification and to identify any confidential information in the notification and the final decision.

49) Access to the file for the merging parties and third parties

The merging parties:

While the New Zealand Commerce Commission is subject to New Zealand's general freedom of information legislation (the Official Information Act 1982), there is no specific standalone right of access to the New Zealand Commerce Commission's internal documents and correspondence.  However, the New Zealand Commerce Commission will consider any requests for information under the criteria for disclosure under the Official Information Act 1982, and in any event it will keep the merging parties informed by issuing statements, updating its public register and via media releases (when these are deemed necessary by the New Zealand Commerce Commission, although they do not contain much detail). In some circumstances, documents may be made available to the merging parties to assist them in responding to the New Zealand Commerce Commission's Statements of Issues, or to understand the basis on which the New Zealand Commerce Commission has reached its preliminary conclusions. Submissions from third parties are uploaded to the New Zealand Commerce Commission's website, with any confidential information redacted. 

As noted, information in the New Zealand Commerce Commission's possession (including third party submissions, and the New Zealand Commerce Commission's internal documents and correspondence), may be requested from the New Zealand Commerce Commission under the Official Information Act 1982, however some information may be either aggregated or withheld on the basis of specified grounds including commercial sensitivity. 

Third parties:

New Zealand's Official Information Act 1982 provides that if requested, information held by a public body (such as the New Zealand Commerce Commission) must be disclosed, subject to certain limited exceptions including where it may prejudice the maintenance of law or is likely to unreasonably prejudice the supplier's commercial position. 

Third parties can access the public versions of the relevant applications and submissions before the New Zealand Commerce Commission. The New Zealand Commerce Commission has, however, on occasion also provided third parties, and/or their lawyers, with access to the applicants' confidential material necessary to properly comment on the applicants' or third party's submissions, in which case such disclosure is subject to confidentiality undertakings.

Judicial review

50) Who can appeal and what may be appealed?

New Zealand Commerce Commission decisions can be appealed to the High Court. The Act gives a right of appeal in respect of any decision made by the New Zealand Commerce Commission under the Act and, depending on the decision, is available to a broad range of parties. 

Persons entitled to bring an appeal are:

  • the applicant;
  • the target; and
  • in the case of authorisations, any person with a direct and significant interest in the application and who participated in the NZCC's process leading up to the determination.

The court on appeal can confirm, modify or reverse the New Zealand Commerce Commission's determination or any part of it or exercise any of the powers that could have been exercised by the New Zealand Commerce Commission. The court can also direct the New Zealand Commerce Commission to reconsider, either generally or in respect of specified matters, the whole or a specified part of the matter to which the appeal relates. Parties can subsequently apply for leave to appeal to the Court of Appeal and the Supreme Court. Appeals may be made to the High Court by giving notice of appeal within 20 working days after the date of the NZCC’s determination, or within such further time as the Court allows. Such appeals proceed by way of rehearing.

Any person with sufficient interest in the case may also seek judicial review in the High Court of a decision by the New Zealand Commerce Commission. This is not an appeal of the substance of the decision, but a review of the decision-making process. 


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