The Commerce Commission has today released draft guidelines on how divestment undertakings as part of a merger or acquisition application will be treated.  

"These guidelines will improve the effectiveness and efficiency of the clearance process by assisting businesses and their legal advisers to understand the Commission's approach when assessing divestment undertakings in relation to a merger or acquisition application," said Dr Mark Berry, Commerce Commission Chair. "The guidelines also outline what information the Commission requires when considering a divestment undertaking. Provision of the right information as part of an application will help the Commission make a timely decision."

The Commission is seeking feedback from interested parties on the draft guidelines. After considering feedback received, the Commission will publish finalised guidelines.

The draft guidelines can be viewed on the Commission's website www.comcom.govt.nz under Competition Resources.

Submissions can be made in writing to:  
Divestment guidelines feedback
Commerce Commission, PO Box 2351, Wellington, 6140

or by email to DivestmentGuidelines@comcom.govt.nz by 5 pm,  Friday 12 February 2010.


Background

Section 47 of the Commerce Act prohibits acquisitions of the assets or shares of a business that would have, or would be likely to have, the effect of substantially lessening competition in a market.    

Under section 66(3)(a) of the  Commerce Act, the Commission may give clearance for a merger if it is satisfied that the acquisition will not have, or would not be likely to have, the effect of substantially lessening competition in a market.

Under section 69A of the Commerce Act, the Commission may accept undertakings in giving a clearance.   Undertakings must be provided in written form by the applicant or on behalf of the applicant.    

The Commission can only accept undertakings to divest of assets or shares. Under the Commerce Act the Commission is only able to consider structural undertakings. The Commission is unable to accept behavioural undertakings.