Commission takes no action against Blue Star but will continue to monitor the market
Published01 Aug 1996
The Commission has decided that at this time it will take no action against Blue Star's acquisition of Whitcoulls, but for the next year it will monitor closely the relevant markets.
Commission Chairman Dr Alan Bollard said the Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any market.
Dr Bollard said the Commission's view based on information it currently has, is that this acquisition is unlikely to result in dominance as defined in the Commerce Act. Blue Stars market share is high, but it appears that existing competition and the possibility of new entrants will constrain it.
However, if the Commission's continued monitoring suggests dominance may become a concern, then the Commission has two years within which to ask a court to order divestment of assets or shares. It has three years within which to ask a court to impose other penalties.
Dr Bollard said the Commission has strongly advised Blue Star to very carefully consider the Commerce Act before being involved in any future acquisitions of commercial stationery businesses in New Zealand.
The Commission believes an application for clearance or authorisation would be desirable if Blue Stars considers acquiring any more commercial stationery businesses. This would provide a mechanism for the Commission to formally consider the proposal under the Commerce Act.
The Act provides for people considering a business acquisition to apply to the Commission for clearance or authorisation. Blue Star did not apply for either.
The Commission will grant a clearance if it is satisfied that the acquisition does not result in dominance being acquired or strengthened.
An otherwise prohibited acquisition can still be authorised if the Commission is satisfied that public benefits outweigh detriments to competition.
Both clearance and authorisation, if granted, protect the acquisition against court action under the Commerce Act.
Dr Bollard advised any business concerned about an acquisition it was considering to get legal advice and to talk to the Commission. Potential problems could be addressed by restructuring the acquisition before making a formal application.
But if an application is not made, then a clearance or authorisation cannot be granted and the Commission will investigate the acquisition for a possible breach of the Act.
Media contact: Chief Investigator Business Acquisitions John Preston
