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Commerce Commission To Appeal To Supreme Court

Commerce Commission To Appeal To Supreme Court

The Commerce Commission is seeking leave to appeal to the Supreme Court against the Court of Appeal decision dismissing a claim for liability against Infratil Limited. The Court of Appeal said that Infratil was not liable for breaching the Commerce Act as an accessory in the attempted acquisition of Mana Coach Services by New Zealand Bus Limited (NZBL).

Commerce Commission Chair Paula Rebstock says, "The Court of Appeal's decision confirmed important principles guiding competition analysis in merger cases. However, the Commission is seeking to clarify the law as to accessory liability under the Commerce Act, which is now unclear following the Court of Appeal decision. This is a significant issue for all parties involved in commercial transactions."

There will be no further comment at this stage.

Background
In June 2008, the Court of Appeal confirmed the High Court ruling that the attempted acquisition of Mana Coach Services by New Zealand Bus Limited (NZBL) was likely to substantially lessen competition in the Wellington regional market for rights to supply subsidised scheduled public and school bus services in breach of section 47 of the Commerce Act.

The Court of Appeal also upheld the High Court's earlier order that NZBL pay over $1.1 million in penalties and litigation costs. The Court of Appeal found in favour of certain vendors, directors of Mana Coach Services, holding they were not liable as accessories. The Court of Appeal upheld the High Court finding that Infratil, the parent company that owns NZBL, was not liable as an accessory.

In June 2006, the Wellington High Court ruled that NZBL's attempted purchase of the 74% of Mana Coach Services that it did not already own, breached section 47 of the Commerce Act. The Court determined that the acquisition was likely to substantially lessen competition in the Wellington regional market for rights to supply subsidised scheduled public and school bus services.

The High Court found that NZBL had breached the Commerce Act when its offer to buy the shares became unconditional. The High Court also found that certain vendors of the Mana shares had breached the Act as accessories to the prohibited acquisition. However, the Court refused to impose liability against NZBL's parent Infratil for its role in the transaction.

The High Court subsequently ordered NZBL to pay $500,000 in penalties and around $600,000 in litigation costs.

NZBL and Infratil appealed the High Court's findings on liability, penalty and costs. The Commerce Commission cross-appealed the level of penalty ordered against NZBL and the Court's decision not to impose liability on Infratil.

In an interim judgment issued in November 2007 the Court of Appeal dismissed NZBL's appeal from the High Court's finding that NZBL breached section 47.

New Zealand Bus Limited is a wholly owned subsidiary of Infratil Limited. It is the 100% holding company for Wellington City Transport Limited, Cityline (NZ) Limited and Transportation Auckland Corporation Limited, which operate the New Zealand bus businesses known as Stagecoach Wellington, Cityline Hutt Valley and Stagecoach Auckland.

Mana Coach Services was, at the time of the breach, a family owned and managed business that operated Mana Coach Services and Newlands Buses. It is now owned by Bancorp New Zealand Limited, a merchant bank business. Mana Coach Services operates commuter and passenger bus services within north Wellington, Porirua and the Kapiti coast, as well as a service to the Paraparaumu rail line for Wellington city connections, and coach charter business.

Commerce Act. Under section 47 of the Commerce Act, a person must not acquire assets of a business or shares if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market.

ends

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