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Guidelines provide greater clarity on competition

Guidelines provide greater clarity on competition threshold

The release of the Commerce Commission’s Mergers and Acquisition Guidelines will provide greater clarity around the application of the substantial lessening of competition threshold in the Commission’s work under the mergers and acquisitions provisions of the Commerce Act, Chair Paula Rebstock said today.

The Guidelines replace the Commission’s Practice Note 4 following an extensive internal review and external consultation process, and is available on the Commission’s website homepage, www.comcom.govt.nz.

“The Guidelines better reflect the practices of the Commission in applying the substantial lessening of competition threshold which replaced the dominance threshold in May 2001,” said Ms Rebstock.

The Guidelines have been improved to provide: clarification of the Commission’s analytical framework, specifically defining the key analytical steps of potential, existing and other competition, as well as restructuring the document to better reflect the order of the Commission’s analytical process; additional detail on key terms, especially ‘market’ and ‘substantial lessening of competition’; updated market definition information to alter the range for a SSNIP to be 5-10%, as well as providing more detail on product differentiation and supply and demand side substitutability, and including reference to markets defined by customer type; more detail on the definition of the factual and counterfactual; clarification of what the Commission considers to be entry barriers, including categorisation of three different types of barriers – natural, regulatory and strategic; additional detail on the Commission’s approach to the analysis of ‘maverick players’; a summary section on the analysis of unilateral and non-coordinated power; clarification of a list of market structure and conduct features that are considered in assessing co-ordinated market power, as well as the inclusion of an additional section on the role of retaliation in the analysis of co-ordinated market power; and a summary of the Commission’s final assessment on whether an acquisition substantially lessens competition.

Ms Rebstock said that the Commission would formally launch the Guidelines at a series of industry seminars to be held in March 2004.

The industry seminars will be held on: Auckland – Monday 8 March, Afternoon Wellington – Wednesday 10 March, Afternoon Christchurch – Friday 12 March, Morning

If media are interested in attending, please send an email to communications@comcom.govt.nz. More detail will be provided closer to the time.

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