16 February 2012

Crafar decision raises fairness and neutrality concerns

The High Court judgment on the Shanghai Pengxin bid for the Crafar farms raises difficult questions that could reduce future confidence to invest by overseas investors, says BusinessNZ.

Chief Executive Phil O’Reilly says the decision seems to imply that future overseas investors would find it harder to succeed against a local bidder, even if the overseas investor was prepared to offer substantially more.

“If a local bidder could show that they would meet the same Overseas Investment Act criteria as an overseas bidder, then, according to the High Court decision, the overseas bidder would not be able to succeed.

“This is because the criteria in the Overseas Investment Act do not include the bidding price.

“This implies that a lower offer by a local bidder would trump a higher offer by an overseas bidder, where both bids met the OIA criteria.

“Great legal uncertainty would result from potential overseas investors meeting numerous stringent criteria then finding themselves having to meet local legal challenges.

“This could have a severe impact on the willingness of overseas interests to invest in New Zealand, just at a time when New Zealand needs every ounce of overseas capital to get our economy more productive and successful.

“This implied disadvantage against overseas investors is serious and requires scrutiny and possibly amendment to the Overseas Investment Act to ensure a fairer, more commercially neutral set of criteria,” Mr O’Reilly said.

ENDS

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