The Commerce Commission has warned the Auckland Regional Council (ARC) and Tranz Rail Limited that certain provisions of a draft framework agreement for a rail transit initiative in Auckland are potentially anti-competitive and could be challenged under the Commerce Act.

Commerce Act Manager Jo Bransgrove said that the Commission's concern is that these provisions, by potentially limiting competition, are likely to be unenforceable.

"We are satisfied that the agreement is a draft only, the details of which are still subject to negotiation, and changes are likely to be made before any final arrangements might be entered into," she said.

"We have told the ARC and Tranz Rail that we expect to be kept informed of any developments. Both the ARC and Tranz Rail have provided the Commission with all the information that it has requested."

The Commission investigated two issues.

Allegations were made to the Commission that Tranz Rail refused to provide access to its railway tracks, in breach of the Act, which resulted in the abandonment of the tender process for upgrading Auckland's rail system.

"We are satisfied, on the information available, that these allegations cannot be substantiated," Ms Bransgrove said.

The second issue investigated arose from the first. After the tender process was abandoned, the ARC and Tranz Rail started direct negotiations that led to the draft framework agreement.

"It was this draft framework agreement that caused concern," Ms Bransgrove said.

Background

Section 27 of the Commerce Act prohibits contracts, arrangements or understandings that have the purpose, effect, or likely effect of substantially lessening competition in a market.

In this case there are likely to be separate markets in relation to the network of railway lines and for providing services on those lines.

The Commerce Act provides that action may be taken by any party, even in circumstances where the Commission chooses not to take action itself.

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