5 October, 2001

Commerce Minister Paul Swain has welcomed the early report back of the Commerce (Clearance Validation) Amendment Bill from the Commerce Select Committee.

"The tabling of the Bill with Parliament today is ahead of the deadline set the committee of the 8th October," Paul Swain said.

"The Bill is the result of a Court of Appeal ruling on a case brought by Foodstuffs (Auckland) Ltd.

"The Court ruled that the clearance obtained by Progressive Enterprises Ltd from the Commerce Commission to buy Woolworths New Zealand Ltd should have been considered under the new rather than the old Commerce Act. This new Act came into force on 26 May 2001.

"The Court decision had the potential to affect 10 other clearances for business acquisitions issued by the Commerce Commission.

"These clearances concerned acquisitions worth about three billion dollars. In each case, applications for clearances were submitted before 26 May but the Commission granted the clearances after that date.

"Given the uncertainty that was created by the Court ruling the Government moved quickly to introduce a Bill to the House.

"The Commerce (Clearance Validation) Amendment Bill is based on the general principle that applications for clearances submitted before 26 May should be considered under the old law.

"The Government has, however, decided to exempt the outcome of the Court of Appeal decision on “Foodstuffs vs Progressive” from the coverage of the Bill.

"We are doing this so that Foodstuffs can obtain the benefits of its court action. This is in line with constitutional principle and there is a long list of precedents for taking this approach.

"Our approach will maximise certainty for the business community. Other than Progressive, the 10 companies that obtained clearances can be assured that their clearances are valid. This is particularly important for those companies that have already gone ahead with acquisitions.

"On the other hand, those companies seeking to pursue their interest through the courts can be assured that the outcomes of court decisions will be upheld. This is of particular importance under the Commerce Act which relies on businesses being able to contest outcomes in the courts without government interference.

"It's as much about the robustness of the Commerce Act and the court process as it is about the constitutional issues.

"There are a range of options open to Progressive should it continue to want to pursue the acquisition of Woolworths New Zealand.

"It can appeal the Court of Appeal’s ruling to the Privy Council. Alternatively, it can seek a clearance under the new law. If that approach fails, it has the further option of seeking an authorisation under the Commerce Act.

"The Commerce (Clearance Validation) Amendment Bill will now be considered by Parliament as soon as possible," Paul Swain said.

Ends

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