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Content last updated: 20-03-2020

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  • Merger Screening

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

Any acquisition of assets of shares which would have the effect of substantially lessening the competition in a New Zealand market is caught by the merger rules.

The transaction is considered on a group level and parent companies and subsidiaries and other interconnected and associated companies should be considered as if they were one corporate body.

A legal entity is an associated party if the shareholder has a substantial degree of influence on an undertaking, which may be the case if, for instance, a shareholder has a 10% shareholding of the undertaking and the undertaking has a mix of smaller shareholders.

“Assets” includes tangible as well as intangible assets.

“Shares” includes beneficial interests in, or power to acquire or dispose of, a share, irrespective of voting rights.

2. Establishing jurisdiction for notification of mergers

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

There are no jurisdictional thresholds in New Zealand and no obligation to notify a concentration. The competition act prohibits transactions that would have the effect of substantially lessening competition in a New Zealand market.

The New Zealand Commerce Commission (NZCC) does not have powers to determine that the act has been violated and cannot impose penalties. If the NZCC considers that the concentration violates the competition act, it must refer the case to prosecution before the courts.

The undertakings concerned may seek clearance from the NZCC under the voluntary pre-notification regime. The NZCC recommend that the undertakings concerned apply for a pre-merger clearance if the concentration exceeds the below thresholds. A transaction is unlikely to raise competition concerns if it falls within the below thresholds:

  • the undertakings concerned have a combined market share of less than 40%, and the three businesses in the market with the largest market shares have a combined market share of less than 70%; or
  • where the three businesses in the market with the largest market shares have a combined market share of 70% or more, the undertakings concerned have a combined market share of less than 20%.

Whilst the NZCC recommends applying for clearance if the transaction exceeds the thresholds, in practice, the majority of transactions granted clearance exceed the thresholds.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

Specific rules apply in the farming and fishing industries.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

Specific rules apply to foreign acquisitions of “significant business assets”.

“Signification business assets” is defined as either of the total expenditure involved, price paid or gross value of the assets of the target exceeds NZD 100,000,000.

A foreigner is defined as an “overseas person” who

  • is not a citizen of, or ordinarily a resident of, New Zealand;
  • is a partnership, corporate body of trust with 25% or more ownership or control held by an overseas person by reference to certain factors (e.g. composition of management or beneficial ownership), or
  • a company incorporated outside New Zealand, or a company in which a person holds 25% or more of the shares or voting rights (directly or indirectly), or power to control 25% or more of management.

Foreign acquisition is also caught by the merger regime rules if the overseas person has acquired a controlling interest in a New Zealand corporation through acquisition outside New Zealand of the assets or shares of that corporation.

A “controlling interest” regarding foreign acquisition is defined as the overseas person:

  • controlling the management;
  • holding more than 20% of the votes, shares or right to receive dividend;
  • being the holding company, or
  • holding assets of the New Zealand corporation which gives them effective control over the corporation.

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.3 Relevant undertakings for the calculation of turnover

3.3.2 The undertakings whose turnover is taken into account?

The transaction is considered on a group level and parent companies and subsidiaries and other interconnected and associated companies should be considered as if they were one corporate body.

3.6 Calculation of other thresholds

3.6.1 The principles for calculation of metrics for other thresholds (e.g. transaction value, market share, share of supply etc.)?

The transaction is considered on a group level and parent companies and subsidiaries and other interconnected and associated companies should be considered as if they were one corporate body.

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and last updated on 20-03-2020 by

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