Judicial comment on the "association" test

Another interesting feature of the NZ Bus case was the court's comments on the implications of two persons being associated for merger analysis.

NZ Bus argued that NZ Bus and Mana were "associated" prior to the acquisition by reason of NZ Bus's existing 26% shareholding in Mana. Hence, NZ Bus argued that the acquisition of the remaining 74% should "be treated as an internal transfer that does not substantially lessen competition".

The court found NZ Bus and Mana were not associated by reason of NZ Bus's existing 26% shareholding in Mana, but also noted in dicta that even if they were associated:

"It would turn the section on its head to presume that it creates an exception where acquirer and target are already associated, whether or not the acquisition substantially lessens competition on the facts."

That is, the court still had to consider whether an increased (and in this case a 100%) shareholding would change the competitive dynamics of any market.

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