The Commerce Commission today cleared the merger of EnergyDirect and Capital Power.
The owners of the two energy companies are presently considering whether the merger will, in the end, proceed.
Commission Chairman Alan Bollard said that after studying the proposal, the Commission concluded the proposed merger would not result in either company acquiring or strengthening a dominant position in any market.
This application for clearance is the first the Commission has considered since the High Court decision in the Power New Zealand v Mercury Energycase. That case was an appeal by Power New Zealand against the Commission decision to give clearance for Mercury Energy to acquire Power New Zealand.
The High Court upheld the Commission's decision and rejected all of Power New Zealand's criticisms of the Commission's procedures. In its judgment, the High Court suggested some refinements to the Commission's approach to enhance the analysis of industry and competition issues in power company mergers. These refinements have been adopted in considering this merger.
The Commission's view is a merger of EnergyDirect and Capital Power would result in minor aggregation in the national retail electricity market and minor loss of cross-border competition in electricity distribution markets.
However, Dr Bollard said that this loss of potential cross-border competition was small compared to the overall size of the markets. In addition, the competitive constraints currently faced by the two companies would not be significantly changed by the proposed acquisition.
Media contact:Communications Officer Vincent Cholewa
