Commission investigating Fletcher Challenge and ECNZ gas acquisitions
Published13 Mar 1997
The Commerce Commission said today that it is investigating Fletcher Challenge Energy increasing its shareholding in the Kupe natural gas field, and Electricity Corporation of New Zealand (ECNZ) also acquiring shares in Kupe from Fletcher Challenge Energy.
Commission Chairman Dr Alan Bollard said that the Commission has already obtained a deed from Fletcher Challenge Energy stating that the company will make no use of its additional interest in the gas field until either the Commission confirms that the acquisition does not breach the Commerce Act or until after any court action is resolved.
Dr Bollard said that the Commission is investigating ECNZ's acquisition of shares in Kupe to decide if it raises any competition concerns.
The Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets. It also prohibits arrangements that substantially lessen competition. If the Act is breached, courts can impose penalties of up to $5 million, order the divestment of shares or assets, and make a wide range of other orders and injunctions.
Fletcher Challenge Energy has extensive interests in natural gas markets through a wide range of companies. Before the acquisition, it owned 22.5 percent of Kupe.
Today, a two stage acquisition was announced, in which Fletcher Challenge Energy acquired the 40 percent of Kupe owned by Western Mining Corporation, and then sold some of those shares to ECNZ.
The deed between Fletcher Challenge Energy and the Commission prevents Fletcher Challenge Energy using any voting rights that come with its interest in Kupe, taking any gas from Kupe, altering the structure of the Kupe business or selling any of its interest in Kupe to any company with which it is associated, until Commerce Act issues are resolved.
"The deed effectively protects competition for the benefit of New Zealand and allows for a thorough investigation," Dr Bollard said. "It prevents Fletcher Challenge Energy benefiting from any market power it may have acquired until the Commission, and if necessary the courts, have determined how the acquisition will affect competition.
"Our investigation will be carried out as quickly as possible - I expect it to be completed within a few weeks. We will then decide what, if any, further action to take."
Under the deed Fletcher Challenge Energy has agreed to co-operate with any court action taken, so that the court can make its decision as quickly as possible.
Copies of the deed are available from the Commission's Wellington office.
