If a business thinks that its proposed merger with a competitor might substantially lessen competition in a market, it should seek the Commission's approval for the merger to proceed before it happens. If it does not, the business risks the Commission, or others, taking enforcement action which can result in significant penalties or a Court reversing the merger.
Do I need to apply for a clearance?
The Commission administers a voluntary merger clearance regime and encourages businesses that are contemplating a merger to seek legal advice, and to discuss their plans with us before they merge. While we cannot give ‘informal’ clearance, we can provide guidance on potential areas of concern.
Our Mergers and Acquisitions Guidelines provide in-depth information on the laws that govern our merger assessments, the economic and legal analysis we conduct, and the process we follow to make a decision in relation to a clearance application.
We publish completed applications on our website, as well as issuing a media release to alert interested parties to the application.
Merger clearance process
Each merger clearance application is assigned to an investigation team made up of investigators and specialist economic and legal staff. Our assessment involves requesting information and documents from relevant parties, conducting research, and interviewing interested parties such as competitors, suppliers, and customers in the industry. This information is used to assess whether the merger is likely to substantially lessen competition in a market.
If our Commissioners are satisfied the proposed merger will not substantially lessen competition, we clear the merger. If they are not satisfied, we must decline to clear the merger under the Commerce Act. We announce our decision publicly through a media release, as well as publishing written reasons for our decisions on the case register on our website.
What happens if a merger takes place without a clearance?
Sometimes businesses merge and do not apply for a clearance. If there is no likely substantial lessening of competition as a result of the merger, there is no problem. However, if the Commission has concerns that a substantial lessening of competition is likely, we, and others, can take enforcement action under the Commerce Act. This can result in significant penalties and a Court may order the merger to be reversed.