The Commerce Commission today cleared Mercury Energy Limited to buy up to 100 percent of the shares of Power New Zealand Limited.
Commission Chairman Alan Bollard said that after studying the proposal and extra information it had gathered, the Commission concluded the proposal would not result in any company acquiring or strengthening a dominant position in any market.
The Commission's view is that the proposed acquisition would result in aggregation in the national retail electricity market and some loss of cross-border competition in electricity distribution markets.
In respect of the national retail electricity market, the merged entity would have an approximately 44 percent share of the market if the acquisition proceeded. However, several other power companies and electricity retailing organisations would remain in the market. Furthermore, barriers to entry to this market are relatively low and would, in the Commission's view, remain unchanged by the proposed acquisition.
In respect of electricity distribution markets, Mercury Energy's and Power New Zealand's Waitemata networks have a common border. If the acquisition proceeded, some customers close to the border would lose a potential competitor for their line business.
However, Dr Bollard said that this loss of potential cross-border competition was small compared to the overall size of the two distinct markets. In addition, the competitive constraints currently faced by the two companies would not be significantly changed by the proposed acquisition.
Media contact:Vince Cholewa, Communications Officer
