Commission clears Mercury Energy/Utilicorp joint venture to acquire Power New Zealand
Published27 Jun 1997
The Commerce Commission today cleared a joint venture between Mercury Energy and Utilicorp NZ to acquire up to 100 percent of the shares in Power New Zealand.
Mercury and Utilicorp would each own 50 percent of the joint venture. There are also associated cross shareholdings in WEL Energy and Bay of Plenty Electricity.
Commission Chairman Dr Alan Bollard said the Commission was satisfied that the acquisition would not result in any party acquiring or strengthening a dominant position in the relevant electricity markets. The Commission analysed the matter as though Mercury, Power NZ, WEL Energy and Bay of Plenty Electricity were all one entity.
The Commission had previously cleared Mercury to acquire up to 100 percent of the shares in Power NZ. That clearance, granted in 1994, did not involve a joint venture with any other companies.
Power NZ appealed the 1994 clearance to the High Court, and the High Court rejected the appeal. Power NZ then appealed to the Court of Appeal, and that Court also rejected the appeal.
The Courts' judgments were significant for the whole electricity industry. They gave strong support to the way in which the Commission views business acquisitions in the industry. They set precedents for how the complex economic and legal issues involved in these highly technical markets should be viewed in relation to business acquisitions.
Dr Bollard said that although the acquisition would result in aggregation in the national retail market of almost 40 percent, there will still be other powerful players, as well as minor players, in the market.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. Parties can apply to the Commission for clearance, which will be given if the Commission is satisfied that dominance is not acquired or strengthened.
