The Commerce Commission today declined to clear Stagecoach Holdings plc subsidiary, New Zealand Bus Limited, to acquire Transportation Auckland Corporation Limited, which trades as The Yellow Bus Company.

Commission Acting Chairman Peter Allport said that the Commission was not satisfied that Stagecoach would not acquire or strengthen a dominant position in the market for scheduled bus passenger services in the greater Auckland metropolitan area if it acquired the Yellow Bus Company.

Mr Allport said that existing competition would not be enough to constrain the market power of a combined Stagecoach/Yellow Bus Company. The Commission also concluded that it was unlikely there would sufficient sustainable new entry to the market to constrain the combined company.

The Commission also considered the power that the Auckland Regional Council (ARC) would have to constrain the combined company. It concluded that although the ARC currently provides some competitive constraint on the behaviour of both companies, the Commission is not satisfied that it could continue to do so if the companies combined.

The Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market. Parties can apply to the Commission for a clearance, which will be granted if the Commission is satisfied that dominance is not acquired or strengthened.

In investigating an application for clearance, the Commission must define the relevant markets and assess what impact the proposal would have on competition in those markets.

In this case, New Zealand Bus Limited applied for clearance to acquire either the assets and business of Transportation Auckland Corporation Limited, or all of the shares of the company.

The Commission defined three relevant markets. Those for school bus services in the greater Auckland metropolitan area, charter bus services in the greater Auckland metropolitan area and scheduled bus passenger services in the greater Auckland metropolitan area.

It concluded that proposal would not result in dominance being acquired or strenghtened in the markets for school bus and charter services.

However, it was not satisfied that Stagecoach would not acquire or strengthen a dominant position in the market for scheduled bus services, and therefore declined to clear the proposed acquisition.

Media contact: Commerce Act Manager Jo Bransgrove

Phone work (04) 498 0958

Communications Officer Vincent Cholewa

Phone work (04) 498 0920

Commission media releases can be viewed on its web site www.comcom.govt.nz