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Brief Counsel

Commerce Commission to review competition approach

12 March 2013

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​The Commerce Commission is reviewing its M&A and authorisations policies and has released draft guidelines for consultation.

This is an important opportunity to give feedback on the Commission’s approach to competition law.  There have been some significant decisions since the Commission last reviewed its processes, including The Warehouse case, Kotahi decision and the Australian Metcash case, so interest in the review should be high.

Submissions are due to the Commission by Tuesday 9 April.

How we can help

Chapman Tripp will be participating in this process by making a written submission and following up by meeting with Commission staff.  If there are any views that you would like represented in the context of our submission, please contact one of our competition team.

We will be discussing the guidelines with the Commission between 28 March and 9 April 2013, so would welcome any input before then.  Alternatively, if you wish to submit in your own right, we would be happy to help you with your submissions.

This consultation is not a complete re-working of the Commission’s approach to merger regulation.  Rather, the new guidelines are for the most part a plain English re-write of existing practice, updated to recognise recent decisions.  Still, this is a valuable opportunity to give the Commission practical feedback on “user” experience with the Commission’s approval processes.  Areas of interest include:
  • how probable a potential counterfactual scenario must be in order for the Commission to consider it “likely” and as such compare it to a “factual” (the state of affairs after an agreement)
  • how firms might gain certainty where they seek authorisation but the Commission cannot assess a public benefit due to the factual not substantially lessening competition (currently these are not authorised on the grounds of “no jurisdiction”)
  • whether there may be a formalised process of private discussion with the Commission where parties can decide whether to make an application without disclosing their actions to the market, and
  • whether statements of unresolved issues during the clearance or authorisation process could recognise issues that have been settled by the Commission – for instance which market(s) are being analysed, or which counterfactuals are relevant.

The draft guidelines

The draft guidelines reinforce the key elements of the Commission’s historical approach to competition assessment.  Those elements include the counterfactual test, the “hypothetical monopolist” or “SSNIP” test; and the “safe harbours”, within which an acquisition will probably not amount to any sort of anti-competitive merger.

The main areas for change come from the Commission’s reading of The Warehouse case1.   The Commission has emphasised that it may consider multiple potential “counterfactuals” and that applicants will have their clearances or authorisations declined unless the Commission is convinced that there will be no anti-competitive effects when measured against all potential counterfactuals. 

Our thanks to Sebastian Templeton for writing this Brief Counsel.  For further information, please contact the lawyers featured.

Footnote

1  The Commerce Commission v Woolworths Limited [2008] NZCA 276

Contacts