Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Merger and acquisitions guidelines

Merger and acquisitions guidelines

The Commerce Commission today released guidelines on how applications for mergers and acquisitions involving the ‘failing firm’ argument will be treated. The guidelines are designed to assist businesses and their legal representatives by explaining how the Commission will assess claims that the target firm (or division of a firm) is failing as well as outlining the types of supporting evidence that may be required. These guidelines supplement the Commission’s Mergers and Acquisitions Guidelines.

The rationale for accepting failing firm claims is that any harm to competition would result even without the acquisition because the target firm would be forced to cease operating in the near future and its assets would leave the market. The circumstances of claims that a firm is failing vary and each case is assessed on its facts.

“When presented with an application that uses the failing firm argument, the Commission will first examine whether the facts support the claim that the target firm is failing,” said Dr Mark Berry, Commerce Commission Chair. “The Commission will then examine the possibility that a credible third party could acquire the firm or its assets without this resulting in a substantial lessening of competition.”

“In some situations which involve a claimed failing firm the need for a clearance decision is urgent,” said Dr Berry. “The Commission can only act quickly if the parties provide the necessary information promptly. Publishing these guidelines will provide clarity about the information the Commission requires.”

Draft guidelines were released for public consultation in July 2009 and some suggestions made as a result of the consultation process are reflected in the final guidelines.

The guidelines are available on the Commission’s website under Business Competition/Mergers and Acquisitions


Section 47 of the Commerce Act 1986 prohibits the acquisition of a business or shares if this would, or would be likely to, substantially lessen competition in a market. Applications may be made under section 66 of the Commerce Act for clearance of proposed acquisitions. The Commission will grant clearance if it is satisfied that the acquisition will not have, or would not be likely to have the effect of substantially lessening competition.

Since the Commerce Act came into effect, the Commission has considered a number of clearance applications where a failing firm claim was made. In some of these cases the Commission found that the claim was supported by the facts and clearance was given and in some other cases the claim was not found to be valid.

The Commission has not previously issued failing firm guidelines, although the Commission’s Merger and Acquisition Guidelines issued in January 2004 contain a short section on failing firms. The Failing Firms Guidelines do not introduce any change in the Commission’s existing approach to analysing these claims.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Westpac: Sets Out Plan To Go Cheque-Free

Westpac NZ has announced details of its plan to phase out cheques, after signalling in May that it would be supporting a move to other forms of payment. Cheques will cease to be available as a means of payment after 25 June 2021. Westpac NZ General ... More>>


NZTA: Major New Zealand Upgrade Programme Projects Go To Tender

Two major New Zealand Upgrade Programme projects are beginning tenders for construction. The New Zealand Upgrade Programme is a $6.8 billion investment to get our cities moving, to save lives and boost productivity in growth areas. The first Auckland ... More>>

Reserve Bank: RBNZ Seeks To Preserve Benefits Of Cash

The Reserve Bank – Te Pūtea Matua is taking on a new role of steward of the cash system “to preserve the benefits of cash for all who need them”, Assistant Governor Christian Hawkesby told the Royal Numismatics Society of New Zealand annual conference ... More>>


Economy: Double-Dip Recession Next Year, But Housing Rolls On

New Zealand's economy is expected to slip back into recession early next year as delayed job losses, falling consumer spending, and the absence of international tourists bites into growth. More>>


Microsoft New Zealand: Microsoft Expands “Highway To A Hundred Unicorns” Initiative To Support Startups In Asia Pacific

New Zealand, 14 October 2020 – Today Microsoft for Startups launches the Highway to a Hundred Unicorns initiative in Asia Pacific to strengthen the region’s startup ecosystem. This follows the initiative’s success in India, where 56 startups were ... More>>

Fonterra: Farmers Taking Another Step Towards New Zealand’s Low Emissions Food Production

They’re hot off the press and intended to help take the heat out of climate change. Fonterra farmers are already among the world’s most sustainable producers of milk and now have an additional tool in their sustainability toolbox. Over the last few ... More>>


Courts: Businessman Eric Watson Sentenced To A Four-Month Jail Term

New Zealand businessman Eric Watson has been sentenced to a four-month jail term in the UK for contempt of court, TVNZ reports. More>>

OECD: Area Employment Rate Falls By 4.0 Percentage Points, To 64.6% In Second Quarter Of 2020

The OECD area employment rate – the share of the working-age population with jobs – fell by 4.0 percentage points, to 64.6%, in the second quarter of 2020, its lowest level since the fourth quarter of 2010. Across the OECD area, 560 million persons ... More>>

Spark: Turns On 5G In Auckland And Offers A Glimpse Into The Future Of Smart Cities

Spark turned on 5G in downtown Auckland today and has partnered with Auckland Transport (AT) to showcase some of the latest in IoT (Internet of Things) technology and demonstrate what the future could look like for Auckland’s CBD with the power of 5G. 5G is ... More>>

Stats NZ: Monthly Migration Remains Low

Since the border closed in late-March 2020, net migration has averaged about 300 a month, Stats NZ said today. In the five months from April to August 2020, overall net migration was provisionally estimated at 1,700. This was made up of a net gain ... More>>

University of Canterbury: Proglacial Lakes Are Accelerating Glacier Ice Loss

Lake Tasman, New Zealand | 2016 | Photo: Dr Jenna Sutherland Meltwater lakes that form at glacier margins cause ice to recede much further and faster compared to glaciers that terminate on land, according to a new study. But the effects of these glacial ... More>>


Dairy: Fonterra Sells China Farms

Fonterra has agreed to sell its China farms for a total of $555 million (RMB 2.5 billion*1), after successfully developing the farms alongside local partners. Inner Mongolia Natural Dairy Co., Ltd, a subsidiary of China Youran Dairy Group Limited ... More>>