NEW ZEALAND Law and Practice Contributed by: Sarah Keene, Jordan Cox, Antonia Horrocks and Victoria Fowler, Webb Henderson
4.3 Reliance on Case Law The NZCC engages frequently with other authorities in relation to international mergers and may seek a waiver from parties to do so as part of the merger notification form. More generally, both the NZCC and the New Zealand courts will rely on Australian case law, given the similarities of the substantive tests and low frequency of court challenges in New Zealand. 4.4 Competition Concerns The NZCC examines: • horizontal unilateral effects (including price increas - es, reduced quality, service or innovation); • co-ordinated effects, where the merger increases the likelihood of tacit or explicit co-ordination between remaining competitors; • vertical foreclosure, assessing the merged firm’s ability or incentive to restrict rivals’ access to inputs, customers or distribution channels; • conglomerate effects, including merger effects that may hinder rivals’ ability to compete effectively across related or complementary products; and • broader impacts on market power, including bar - riers to entry and expansion, countervailing buyer power and effects on innovation competition. 4.5 Economic Efficiencies In considering whether a proposed merger would be likely to substantially lessen competition in a market, the NZCC can take economic efficiency gains in the relevant markets into account in considering wheth - er a substantial lessening of competition would be likely to occur in a market. To be relevant, economic efficiencies must occur within the relevant markets, be sufficiently realised and passed on to consumers within the timeframe for competition analysis, and be unlikely to be realised without the merger proceed - ing. Given this test, economic efficiencies have only occasionally been relevant to the merger clearance outcome. In an authorisation application, economic efficiencies are highly relevant to the public benefit and detriment balancing exercise.
Authorisation Assessment The NZCC can authorise mergers that would be likely to have the effect of substantially lessening competi - tion in a market when it is satisfied that the merger will be likely to result in sufficient benefit to the pub - lic to outweigh the competitive harm arising from the merger, so that it should be permitted. Its process is to consider: • whether the merger would be likely to result in a substantial lessening of competition (if it would not, clearance will be granted and there is no need for authorisation); and • which benefits and detriments are merger-specific, and the value of each. If the benefits are likely greater than the detriments, it will authorise the merger. Benefits can include anything of value to the commu - nity generally or any contribution to the aims pursued by society, including the achievement of the economic goals of efficiency and progress. Examples include environmental, media plurality and employment ben - efits. Both qualitative and quantitative benefits may be taken into account by the NZCC in this evaluation. 4.2 Markets Affected by a Transaction The NZCC defines relevant markets by assessing whether goods or services are substitutable as a matter of fact and commercial common sense. This involves examining substitutability across up to five dimensions (product, geographic, supply chain, cus - tomer and time). When looking at demand-side sub - stitution, the NZCC will often use the hypothetical monopolist test (SSNIP test) to identify the smallest set of products or locations where a price increase of around 5% would be profitable. Supply-side substi - tutability will also be taken into account by assessing whether firms could easily enter the relevant market to provide a competitive constraint. There is no de minimis level below which competitive concerns are deemed unlikely. In practice, the NZCC has defined narrow markets in a number of cases and intervened in relation to small mergers affecting low volumes of commerce in New Zealand.
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