Commission draft determination does not oppose Powerco/Egmont electricity merger at this stage
Published30 May 1997
The Commerce Commission released a draft determination today stating that, on the information currently available to it at this stage, it would authorise a proposal for Powerco Ltd to buy up to 100 percent of Egmont Electricity Ltd.
The Commerce Act prohibits business acquisitions that lead to a dominant position being acquired or strengthened in any market. However, the Act also allows such acquisitions to be authorised if the Commission is satisfied that the public benefits arising from the acquisition outweigh its detriments to competition.
Commission Chairman Dr Alan Bollard said that the Commission's preliminary view is that the proposed merger would give rise to a dominant position in the market for the supply of natural gas and electricity to small consumers in the Hawera area.
However, it is also the Commission's preliminary view that the benefits of the merger outweigh any detriments.
Currently small consumers in that area have a choice of natural gas from Powerco, and electricity from Egmont. If the merger proceeds that competition will be lost.
However, the combined entity would benefit from reduced costs and greater profitability, its customers would receive improved services and those who are now Egmont's customers would get improved access to technology.
The draft determination is not the Commission's final decision. Powerco and interested parties now have a clear indication of how the Commission views the proposal, have time to make written submissions and provide further information at a conference. A final decision should be made by July 21.
The Commission is now seeking submissions on its draft determination from Powerco and the other interested parties its has identified.
Timetable of Commission process:
by 13 June applicant and interested parties to make submissions on draft determination
30 June, 1 July conference of applicant and interested parties in Wellington - the conference is an opportunity for further information to be presented and for the Commission to ask questions, it is not adversarial
by 21 July final decision
Background
Powerco is the New Plymouth and Wanganui based natural gas and electricity supplier. Egmont Electricity supplies electricity in South Taranaki. It is surrounded by Powerco.
Media contact: Chief Investigator Network Industries Unit David Taylor
