NEW ZEALAND Law and Practice Contributed by: Ashton Goatley, Henry Willis, Sarah Keene and Erin Hickey, Webb Henderson
but a more complex and lengthy process than, apply - ing for clearance. The Commission can investigate any completed transaction for which clearance or authorisation was not obtained, and it conducts market surveillance to this effect. Third parties may also make complaints to the Commission if they believe the Commerce Act has been breached. In practice, the Commission opens investigations on a regular basis. 6.2 Criteria for Antitrust/Competition Review The Commission must grant clearance in respect of a proposed transaction if it is satisfied that the invest - ment would not be likely to substantially lessen com - petition in the relevant markets. The Commission uses market concentration indicators as an assessment tool, under which a merger is unlikely to require clear - ance where, post-merger: • the three largest firms in the market have a com - bined market share of less than 70%, and the merged firm’s combined market share is less than 40%; or • the three largest firms in the market have a com - bined market share of 70% or more, and the merged firm’s combined market share is less than 20%. However, the aforementioned concentration indica - tors have the status of guidance only, and are not safe harbours. Other competition effects, such as vertical and conglomerate effects, also need to be consid - ered. When assessing whether a transaction will, or is likely to, substantially lessen competition, the Com - mission considers the likely state of competition in the market with the proposed transaction and com - pares this to potential counterfactual situations (ie, if the transaction did not proceed). The Commission will generally choose the most competitive scenario as the counterfactual to compare against, noting that the counterfactual chosen does not have to be “more likely than not” to occur, but merely “to have a real chance” of occurring. During this assessment, the Commission also consid - ers factors such as the overlap between existing and future competitors, vertical integration and changes
to supply chains, and the potential for co-ordinated conduct among competitors. 6.3 Remedies and Commitments The Commission is only able to accept structural remedies in order to approve a merger. Specifically, this means a divestment of assets or shares. Ancil - lary contractual arrangements can only be taken into account in the context of any such divestment as part of the Commission’s factual consideration. However, the Commission does not accept behavioural under - takings as conditions that might enable it to approve a merger. 6.4 Antitrust/Competition Enforcement If the Commission is alerted to a transaction that may substantially lessen competition in a market (and for which no clearance has been sought), it can launch an investigation. If the transaction has not yet completed, the Commission may also seek an undertaking that the transaction will not be completed until the Com - mission has completed its investigation. If either party refuses to provide such an undertaking, the Commis - sion can seek an injunction from the High Court in line with the requested undertaking. If the Commission ultimately forms the view that the transaction would or did give rise to (or is or was likely to give rise to) a substantial lessening of competi - tion in a market, it can seek pecuniary penalties and divestment orders from the High Court. The maximum pecuniary penalty for a body corporate is the greater of: • NZD10 million; or • three times the commercial gain resulting from the contravention or (if that cannot readily be ascer - tained) 10% of the turnover of the person that con - travened the Commerce Act and its interconnected bodies corporate.
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