With business acquisitions appearing to continue at a high rate, the Commerce Commission is warning businesses involved to ensure they understand their obligations under the Commerce Act.
Commission Chairman Dr Alan Bollard said that the Commission's surveillance suggests that many acquisitions now involve businesses that had previously not engaged in acquisitions.
In the last three months the Commission has carried out preliminary investigations into 96 business acquisitions of which it had not been notified. In 30 cases further investigation was carried out because there were concerns that parties involved might acquire dominance in a market.
The results of the 30 full investigations were:
no dominance concerns found 11
acquisitions did not proceed 3
parties applied to Commission for clearance 2
acquisition might not proceed, Commission maintaining watching brief 8
still under investigation 6
Dr Bollard said that the Commerce Act prohibits business acquisitions that result in dominance being acquired or strengthened in any markets.
"People unsure of what this means in their case should get legal advice from lawyers experienced in working with the Act," Dr Bollard said.
"We also strongly encourage people to contact the Commission. We cannot give them legal advice about their proposal, but we can explain how the law works and how we operate.
"If, after getting advice, people are concerned that their proposed acquisition does raise concerns, then they may be able to restructure it so that it can go ahead in a different form that still achieves their objective but does not raise dominance concerns."
He also strongly advised that, where appropriate, parties should apply for Commission clearance or authorisation of their business acquisition. If granted, clearance or authorisation protect the acquisition from court action under the Commerce Act.
A clearance will be granted if the Commission 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, despite dominance being acquired or strengthened, public benefits from the acquisition outweigh its detriments to competition.
If parties do not apply for clearance or authorisation the Commission can investigate an acquisition as a possible breach of the Act.
