NEW ZEALAND Law and Practice Contributed by: Ashton Goatley, Henry Willis, Sarah Keene and Erin Hickey, Webb Henderson
result, or would be likely to result, from the transac - tion; and • the ability of the Commission to seek an injunction restraining a transaction from proceeding if the Commission is concerned that the transaction may substantially lessen competition in any market in New Zealand, and to seek pecuniary penalties and divestment orders (third parties may seek dam - ages), if it is demonstrated that a transaction would have, or would be likely to have, that effect. Where there is an appreciable risk that the Commis - sion may be concerned that a transaction would be likely to have the effect of substantially lessening competition in a market in New Zealand, it is com - mon practice for sale and purchase agreements to be conditional on clearance from the Commission before the acquisition is implemented. Clearance cannot be granted retrospectively. The FDI need not have resulted in the foreign investor obtaining total ownership of a New Zealand business for competition concerns to arise. The Commission also considers the effect of any acquisition by “associ - ated persons”. Persons are “associated” if one has a “substantial degree of influence” over the other. This is a factual test for which the proposed sharehold - ing level in the target is not determinative (it can, for example, arise at a minority shareholding level below 10% if other relevant circumstances exist). There are no specific exemptions for FDI from the merger control regime under the Commerce Act. Applications The usual clearance application process starts with the applicant entering into pre-application discussions with the Commission, to outline the relevant markets and rationale for the proposed transaction, enabling the Commission to identify the information that will need to be included in the clearance application for it to be accepted for registration, and to outline key issues and evidentiary requirements to assist the Commission in progressing the application. The next step is filing a clearance application in the prescribed form (available on the Commission’s website) and payment of the filing fee (currently
NZD3,680). Applications are publicly notified via the Commission’s website (confidentiality may be granted in limited and exceptional circumstances), including a redacted public version of the application. The Com - mission aims to provide a decision within 40 working days of submission, but complex applications may take in excess of 100 working days. Investigations The Commission begins by issuing a statement of preliminary issues and inviting public submissions. It will also undertake its own investigations, including interviews and information requests. The Commission will then either issue a clearance (its target timeframe for this purpose is 40 working days after submission of the application) or publish a further statement of issues and take further submissions. Following fur - ther consideration, it will either issue a clearance (its target timeframe for this purpose is 90 working days after submission of the application) or publish a fur - ther statement of unresolved issues and take further submissions before issuing a final decision (potentially 100+ working days after submission of the applica - tion). Submissions and determinations are generally made public on the Commission’s website – parties may assert confidentiality or commercial sensitivity in respect of the submission, but ultimately the Com - mission will determine whether to treat the information as such. The statutory considerations applied in this assessment are the same as for the OIO’s publication of its decision summaries – see 4.3 Disclosure and Reporting Obligations . If clearance is granted, it provides statutory immunity to the investor in respect of the proposed transaction (subject to the transaction being completed within 12 months of the clearance being granted – outside of this, a new clearance must be applied for). As referred to in the foregoing, it is also possible to receive authorisation for transactions that will have, or would be likely to have, the effect of substantially lessening competition in a market in New Zealand but which are likely to result in public benefits that out - weigh the lessening of competition. This is similar to,
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