Commission clears UnitedNetworks to acquire Orion's gas distribution networks
Published24 Dec 1999
The Commerce Commission yesterday cleared UnitedNetworks Limited (United) to acquire the gas assets of gas and electricity distributor, Orion New Zealand Limited.
The proposal involves United acquiring Orion's gas distribution networks, industrial gas trading business, the North Island activities of Orion's contracting business and a 5 percent interest in the Southdown co-generation power station joint venture.
United, formerly Power New Zealand Ltd, is principally an energy networks business, with electricity networks in Auckland, Wellington and the Thames Valley/Bay of Plenty area, including Tauranga, Rotorua and Taupo.
Commissioner Dr Kate Brown said that the Commission was satisfied that, should the acquisition go ahead, United's dominant position in the electricity distribution markets would not be strengthened.
The Commission was also satisfied that the acquisition would not result in Orion's current dominant position in the gas distribution markets being strengthened as a result of United acquiring the gas networks.
The effect of the acquisition in the gas wholesale market would be to replace Orion as a gas supplier with United, with no market aggregation resulting. The Commission did not find any dominance concerns in the network contracting services market.
The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets.
Parties can apply for a clearance, which will be granted if the Commission is satisfied that dominance is not acquired or strengthened. A clearance, if granted, protects an acquisition from legal action under the Act.
The Commission noted that the purchase of a 5 percent interest in the Southdown co-generation power station joint venture was not sufficient for United to be considered "involved" in an electricity supply business under the Electricity Industry Reform Act 1998.
