Mergers and Acquisitions FAQs

Under what circumstances do merging firms have to file for clearance?

Filing for merger clearance in New Zealand is voluntary, meaning that the decision of whether to seek clearance from the Commission for a transaction sits with the merger parties. The Commission cannot require parties to file for clearance.

However, if parties do not file for clearance, and the Commission forms the view that their transaction may have, or may have had, the effect of substantially lessening competition, the Commission can open an investigation into the transaction and ultimately take enforcement action which could result in significant penalties or a court reversing the transaction.

What do you mean by ‘voluntary’ regime? Does it mean companies aren’t required to get clearance?

‘Voluntary’ means that the decision of whether to seek clearance from the Commission for a transaction sits with the merger parties. The Commission cannot require parties to file for clearance.

However, if parties do not file for clearance, and the Commission forms the view that their transaction may have, or may have had, the effect of substantially lessening competition, the Commission can open an investigation into the transaction and ultimately take enforcement action which could result in significant penalties or a court reversing the transaction.

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.

What are the potential outcomes of a clearance application?

If the Commission is satisfied that the transaction is not likely to substantially lessen competition in any market, then it must give clearance to the transaction. This is known as an unconditional clearance.

If the Commission is not satisfied that the transaction is not likely to substantially lessen competition in any market, then it must decline to grant clearance to the transaction.

Where a merger raises competition concerns, an applicant can offer an undertaking to sell certain assets or shares as a condition of clearance in order to remedy those competition concerns. The Commission is able to grant clearance to the transaction subject to the divestment of the identified assets or shares.

Finally, the clearance application may be withdrawn by the applicant, including in circumstances where the Commission had indicated by way of Statement of Issues or Statement of Unresolved Issues that it was not at that point satisfied that the transaction would not be likely to substantially lessen competition in any market.

What is the effect of a clearance?

If we clear or authorise a merger, the merger cannot be legally challenged in the courts under s 47 of the Commerce Act 1986, provided it is completed within 12 months from the date that clearance or authorisation is granted.

What is the typical process for a clearance application?

The typical stages of a clearance application are set out in the diagram on our Merger clearance process page.

The Commission has announced its decision - when will it release its written reasons?

We are only required by law to publish written reasons if we decline to grant a clearance or merger. However, we generally publish reasons to explain our clearance decisions, and to provide guidance to interested parties and future applicants.

While we draft written reasons during our investigation, we can only finalise these after our decision. This means that we generally do not publish written reasons on the day we issue our decision.

We do, however, recognise that businesses want to understand the reasons for our decisions as soon as possible, especially if we decline a merger. Where we have declined clearance, we generally aim to publish written reasons within 10 working days.

Why has the Commission extended the timeframe for its decision?

The Commission aims to reach a decision to grant clearance or to issue a Statement of Issues within 40 working days of the date that the clearance application is registered.

The Commission will seek an extension if it requires additional time to reach a decision on the clearance application. The Commission will aim to provide accurate and complete timelines at an early stage; however, we may need to seek further extensions later in the process, including for the reasons set out at [6.31] of the Mergers and Acquisitions Guidelines.

What is a Statement of Preliminary Issues?

A Statement of Preliminary Issues is a document prepared early in our investigation, which outlines our preliminary views of the competition issues that we will need to consider during our investigation (based on the information that we have available to us at the time). It is prepared in order to increase the transparency of our process, provide interested parties with an opportunity to consider and submit on the matters identified, and gather further information which might assist our investigation.

What is a Statement of Issues?

We publish a Statement of Issues on our website where, following our initial investigation, we have concerns about potential competition issues that may arise from a proposed merger.

A Statement of Issues is not a final decision, and does not mean that we intend to decline or clear a merger. It aims to clearly outline our concerns and invite the applicant, target, and interested parties to provide further information relating to those concerns.

What is a Statement of Unresolved Issues?

If, following receipt of submissions on the Statement of Issues (see above) and further investigation, we consider any competition issues remain unresolved, we are likely to publish a Statement of Unresolved Issues. A Statement of Unresolved Issues provides the applicant with a further opportunity to allay our concerns, including by way of proposed divestment undertakings. It also gives the target and interested parties a further opportunity to provide information relating to these concerns.

I want to make a submission on a Statement of Preliminary Issues, Statement of Issues, or Statement of Unresolved Issues. How do I do that?

The Commission welcomes submissions on its public statements. If you would like to make a submission to the Commission on a Statement of Preliminary Issues, Statement of Issues, or Statement of Unresolved Issues, please send your submission to registrar@comcom.govt.nz.

The Commission publishes submissions that it receives on the case register of its website. If your submission contains information that you regard as confidential, please provide us with confidential and public versions of your submission. Confidential information must be clearly marked (by highlighting the information and enclosing it in square brackets). At the same time, a schedule must be provided which sets out each of the pieces of information over which confidentiality is claimed and the reasons why the information is confidential (preferably with reference to the Official Information Act 1982IA).

The Commission will consider any request to remain anonymous made by a party seeking to make a submission, but this must be discussed with the Commission before the submission is lodged. It is rare for the Commission to accept that an entire submission must be treated as confidential. Submitters must justify any claims of anonymity by providing reasons for the claim.

Submissions and cross-submissions will generally only be accepted within the notified submission timeframe (which can be found set out in the relevant Statement, and also on the ‘timeline’ tab of the case register). This ensures that we continue to progress the investigation in a timely fashion.

I am not able to make a submission on a Statement of Preliminary Issues, Statement of Issues, or Statement of Unresolved Issues within the submission timeframe set out in the Statement. Can I still provide a submission?

If you would like to make a submission but will struggle to do so within the requested timeframe, we encourage you to register your interest with us by contacting the Registrar at registrar@comcom.govt.nz, so that we can try and accommodate you. Please note, however, that we may place less weight on submissions received after our deadline.

I belong to a trade body and our members have concerns about a merger which is the subject of an application - are you able to come and talk to them about the application process?

While we cannot provide competition law advice, or discuss non-public aspects of merger clearance or authorisation applications, we are happy to speak to interested parties about how a clearance/authorisation application works, the legal framework that the Commission applies, and how those parties can participate in the process.

How does the decision-making process work?

Each clearance application is decided by a panel of members of the Commission (known as a Division) appointed by the Chair for that purpose.

The Division is supported by a multi-disciplinary team of Commission staff, comprising one or more investigators, and economic and legal staff. Staff brief and advise the Division during the investigation, including providing key facts and documents. The Division provides staff with guidance and direction.

I would like to know why the Commission reached the decision that it did on a particular clearance application.

We generally publish reasons to explain our clearance decisions, and to provide guidance to interested parties and future applicants.

While we draft written reasons during our investigation, we can only finalise these after our decision. This means that we generally do not publish written reasons on the day we issue our decision.

We do, however, recognise that businesses want to understand the reasons for our decisions as soon as possible, especially if we decline a merger. Where we have declined clearance, we generally aim to publish written reasons within 10 working days.

When our written reasons are finalised, they are published on the case register.

Why is some information in a Statement / reasons document redacted?

In performing its role, the Commission seeks, gathers, and receives information from a variety of sources. Some of this information is private or commercially sensitive; for example, information about the forward-looking business plans of a particular company.

It is important that the Commission is able to gather this information, because it may be relevant to the Commission’s assessment of the clearance application.

In determining whether to redact information from our public Statements, we consider the importance of protecting the commercially sensitive information of market participants, against the general public interest in promoting the transparent conduct of public affairs and the Commission’s desire to receive information from third parties that will assist with its merger investigation.

I have concerns about a proposed or completed merger that is not on the Commission’s case register. Who should I contact?

You can call us on 0800 943 600, or email contact@comcom.govt.nz. For further details on how you can get in touch with us, see our Contact us page.