Commission business acquisition activity increases
Published27 Feb 1997
The Commerce Commission has received significantly more applications for clearance of business acquisitions in the half year to December 31 than expected.
Commission Chairman Dr Alan Bollard said the expected total was 30 for the financial year, but 21 have been received in six months. Four applications were declined, two were withdrawn by applicants and 15 were cleared.
"It is pleasing to see the business community acting responsibly and applying to the Commission for clearances," Dr Bollard said.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market. The Commission will grant a clearance if it is satisfied that dominance is not acquired or strengthened.
"We encourage business that are considering acquisitions, but are not sure of where they stand in relation to the Act, to come and talk to us. We cannot give legal advice - that must come from their own lawyers - but we will explain what the law says and how we operate.
"Increasingly business people are taking advantage of our offer, and understanding of the Act is increasing," Dr Bollard said.
To help provide detailed information, the Commission published a book, Business Acquisitions Guidelines, during the half year, explaining how it views the legal and economic issues arising from business acquisitions and when it would take court action against an acquisition.
"If a proposed acquisition is at risk of breaching the Act and the parties get good advice before they go ahead, then they have the opportunity to restructure the proposal so that it no longer puts them at risk, or they can apply for authorisation," Dr Bollard said.
The Act allows for authorisation of business acquisitions that would otherwise be prohibited if the Commission is satisfied that public benefits from the acquisition outweigh detriments to competition. No applications for authorisation were received in the half year.
Both clearance and authorisation, if granted, give legal protection against anyone taking court action under the Commerce Act against the acquisition.
The Commission also actively monitors business acquisitions and investigates those it is concerned about.
In the half year it monitored 138 business acquisition proposals of which it had not been notified. Of these, 84 were found after a brief examination to raise no competition concerns. Further investigation was undertaken on the other 54.
The outcomes of the 54 proposals subject to further investigation were:
32 were found to raise no dominance concerns
8 were subsequently the subject of clearance applications
4 were found to be unlikely to proceed
8 were placed on watching brief (ie developments are being monitored)
