High Court decision significant for whole electricity industry
Published18 Jan 1996
The High Court's decision upholding the Commerce Commission clearance of a proposed merger of Auckland power companies, Mercury Energy and Power New Zealand, has significant implications for the whole electricity industry.
Commission Chairman Dr Alan Bollard said the industry has been changing rapidly since deregulation in April 1993, and this was the first time a court had looked at the competition issues arising from a proposed merger of power companies.
"We have cleared 10 proposed power company mergers since the market was deregulated, we have another one, Capital Power and Energy Direct, on our books now, and it is likely there will be more applications in the future," Dr Bollard said.
"The Court has not only said we were right in our assessment of this case, but has given the industry a clear indication that our interpretation of the Commerce Act in relation to mergers of power companies is correct.
"There are complex issues involved and the Commission has built up considerable expertise in the area."
Considerable work was done with the industry before it was deregulated.
There was widespread consultation about the issues likely to arise from mergers and how markets should be defined. A roadshow visited all power companies in the country and a series of discussion and policy papers was published by the Commission.
Close contact has been maintained with the industry since deregulation and the Commission had already considered five power company mergers before Mercury's application to take over Power New Zealand was made. Power New Zealand appealed against the Commission's decision to clear the proposal, and the Court released its judgment in December.
"The Commission has built up considerable knowledge and experience in the electricity industry, and now the Court has upheld our approach and views," Dr Bollard said.
The Court said: "the Commission did well to produce the report it did and to gather the information it did within such a short timeframe." It also complemented the Commission on the amount of material obtained and number of people interviewed over a relatively short period.
"These comments are a reflection of the Commission's expertise in the area and of the considerable background work it had done," Dr Bollard said.
"If power companies have concerns about mergers or other competition issues, we encourage them to contact us about them."
Media contact:Communications Officer Vincent Cholewa
