Other developments

Australian Competition and Consumer Commission and the Commerce Commission reach in principle agreement on trans-Tasman mergers protocol

The ACCC and the Commerce Commission have agreed in principle to a trans-Tasman mergers protocol. This protocol does not affect the law that will be applied in either country nor the analysis or determination by each Commission. Rather, it is designed to generate a more efficient process where an acquisition has impacts in both New Zealand and Australia. The proposed mergers protocol covers:

• cooperation on specific transactions being considered by both agencies;



• merger reviews being considered by one agency, but where the other may be in a position to assist with that review; and



• general cooperation and information exchange to assist the agencies to carry out their general merger review responsibilities.

The protocol follows recommendations from the Trans-Tasman Harmonisation Committee, of which Bell Gully partner Phil Taylor is a member.

Telecommunications Commissioner not seeking reappointment

Telecommunications Commissioner Douglas Webb has decided not to seek reappointment when his term expires in March 2007. Mr Webb is New Zealand's first and only Telecommunications Commissioner and his departure has led to some disquiet in some quarters given the changing regulatory framework that will emerge in New Zealand over the next 18 months. His departure has been described by one industry participant as "a bit like the All Blacks changing their first five a month before the World Cup begins". However, Mr Webb was publicly criticised by the Prime Minister for his decision to recommend against local loop unbundling in 2004.

Commission will examine reasons for the lack of new entry into the mobile services market

The Commerce Commission has announced that it will examine the reasons for the lack of new entry into the mobile services market as a prelude to deciding whether or not to commence an investigation into possible changes to the regulatory framework. New Zealand has two incumbent cellular networks (Telecom and Vodafone) roughly sharing the market 50/50.

Commission discussion paper on the gas form of control

The Commerce Commission has released a discussion paper on the form on control it should adopt in regulating the gas pipelines businesses of Powerco and Vector. This discussion paper forms part of the Commission's determination of a final pricing authorisation under the Commerce Act. Unlike many other jurisdictions the Commerce Act splits price control inquiries into two parts: first, the question is should control be imposed and second, the question is what form should that control take. The Commission is careful not to predetermine the form of control when asking the "should" question. The Commission's preliminary view is that a weighted average price cap is the preferred form of control for standard consumers and a total revenue cap is the preferred form of control for non-standard customers and metering services.

Click here for the full discussion paper.

Meanwhile the action continues on Powerco and Vector's judicial review proceedings in relation to the Commission's decision to place them under control (i.e. the antecedent decision to the form of control). In an interlocutory judgment issued on 9 June 2006, the High Court (Justice Wild) granted leave to Powerco and Vector to cross-examine, Paula Rebstock, the Chair of the Commerce Commission.

Commission revokes Pohokura joint selling authorisation given a change in circumstances

The Commerce Commission has determined to revoke an authorisation given in 2003 to Shell, Todd and OMV to jointly sell gas derived from the Pohokura gas field, which lies off the coast of Taranaki in New Zealand's North Island. The original authorisation was given on the basis that it would speed up the commencement of sales from the field as the participants could negotiate single contracts as opposed to separate contracts. Subsequently the parties could not agree on terms and so sold their shares separately with no delay in production. The Commission determined this was a material change in circumstances for the purposes of section 65 of the Commerce Act and hence revoked its authorisation.

Click here for the Commission's full decision.

Investigation into wholesale and retail electricity markets continues

The Commission's investigation into the performance of New Zealand's wholesale and retail electricity markets is continuing. The focus of the investigation is on whether there have been breaches of the Commerce Act: it is not a wide ranging policy review. The Commission has appointed Professor Frank A. Wolak of Stanford University to empirically measure the ability of participants in both the retail and wholesale markets to raise prices above competitive levels.

Authorisation for NZRU's players' salary cap

The Commerce Commission has authorised the New Zealand Rugby Union's salary cap for its Air New Zealand Cup Competition. The Commission concluded that the net benefits flowing from a more even distribution of players through teams were "modest". The NZRU had initially also applied for authorisation of rules for its Division 1 competition which included a ban on paying players or loaning players between unions. The NZRU withdrew this aspect of the application after the Commission indicated in its draft determination that it would not authorise those rules.

Enquiries and information

For more information on any of the cases, articles and features in Competition Update, please contact one of our team:

Phil Taylor, Partner; Jenny Stevens, Senior Associate; Torrin Crowther, Senior Associate; David Blacktop, Senior Associate