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Commerce Commission provides guidelines

Commerce Commission provides guidelines on the process for merger and acquisition clearance applications

The guidelines outline the process, indicative timeframes and the kinds of information that the Commission considers when it looks at clearance applications. The guidelines also introduce two new elements to the way that the Commission processes clearance applications - pre-notification discussions and statements of preliminary issues.

Commission Chair Paula Rebstock said, "The Commerce Commission regards the clearance regime as a top priority work area because of its importance to the New Zealand economy. Mergers and acquisitions perform an important role in the market and can bring benefits by enabling businesses to achieve economies of scale and scope. Some mergers and acquisitions may, however, alter the structure of markets in such a way as to lessen competition."

"The Commission aims to make robust decisions on clearance applications as quickly as possible to improve business certainty. It must, however, balance the need for quick decisions against the need to ensure that it has the best information in order to make sound decisions that will ultimately benefit all New Zealanders." "The guidelines also outline a pre-notification step. While pre-notification discussions are not a compulsory element of the clearance application process, early awareness of a potential clearance application benefits both the merger parties and the Commission."

"Another innovation is to publish a statement of preliminary issues. This will improve the transparency of the process and enable interested parties to make submissions on issues identified by the Commission while it considers the clearance application," said Ms Rebstock.

The Commission would like to thank all those who provided submissions on the clearance process guidelines and application form. Many of the suggestions have been incorporated into the guidelines.

The clearance process guidelines and application form can be downloaded from the Commission's website under Business Competition/Mergers and Acquisitions/Process Guidelines.

Background Section 47 of the Commerce Act prohibits the acquisition of assets of a business or shares if that acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market. The clearance regime administered by the Commission is voluntary. If clearance is given, the merger or acquisition is protected from proceedings for breach of sections 27 or 47 initiated by the Commission and/or any other parties under the Commerce Act 1986, provided it occurs within one year of the clearance being granted (or confirmed by a court) and proceeds in accordance with the clearance.

Section 66 of the Commerce Act provides that those proposing to undertake an acquisition may seek clearance from the Commission for the transaction.

The clearance process guidelines reflect the Commission's current approach to processing applications for clearance. The Commission's practice will continue to develop in light of judicial precedent, general practice and experience with applications for clearance. The guidelines may, in due course, be supplemented, revised or replaced. Although the Commission will generally follow these guidelines in processing clearance applications under the Commerce Act, it will apply them flexibly and may depart from the approach when warranted. The guidelines will be updated as required.


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