New Zealand's competition law is contained in the Commerce Act 1986 (the Act). The merger control provision prohibits acquisitions of business assets or shares that have the effect or likely effect of substantially lessening competition in a New Zealand market.

The New Zealand Commerce Commission (NZCC) is an independent Crown entity responsible for administering the Act and determining applications for clearance or authorisation of proposed mergers.

The NZCC may grant clearance for a proposed acquisition if it is satisfied the acquisition will not be likely to have the effect of substantially lessening competition in a market. The NZCC may grant authorisation for a proposed acquisition if the applicant is able to demonstrate that the public benefit of the merger (efficiency or other gains) outweighs the detriment resulting from the lessening of competition.

The merger clearance and authorisation regime is voluntary. There are no compulsory notification thresholds. However, the NZCC will investigate non-notified mergers that raise potential competition issues and has recently established a public register of these merger investigations.

i Relevant law

The purpose of the Act 'is to promote competition in markets for the long-term benefit of consumers within New Zealand'. The Act promotes competition by prohibiting restrictive trade practices and business acquisitions that reduce the level of competition between businesses.

Section 47(1) of the Act is the merger control provision. It provides that 'a person must not acquire assets of a business or shares if the acquisition would have, or would be likely to have, the effect of substantially lessening competition in a market.'

The NZCC has statutory powers enabling it to:

  1. grant, or decline to grant, applications for clearance or authorisation; and
  2. investigate and bring court proceedings for breaches of the merger control provision.

The NZCC cannot in its own right either determine whether the Act has been breached or impose penalties. Where the NZCC considers that an alleged breach of Section 47 warrants prosecution, it must bring civil proceedings before the courts and seek pecuniary penalties or other appropriate remedies.

ii Qualifying transactions

The Act does not provide any turnover or other thresholds over which a transaction is required to be notified. Instead, New Zealand's merger clearance regime provides a voluntary regime under which parties may (but do not have to) seek clearance or authorisation for a proposed acquisition (discussed in further detail in Section III, below). Clearance or authorisation is only available for proposed transactions and cannot be granted retrospectively.

The NZCC has specified 'concentration indicators' in its Mergers and Acquisitions Guidelines (July 2013).

iii Application to overseas entities

Overseas acquisitions that lessen competition in New Zealand markets are dealt with by section 47A, under which the NZCC may apply to the High Court for a declaration in respect of an acquisition by an overseas person. The High Court may make a declaration if it satisfied that:

  1. the overseas person has acquired a controlling interest in a New Zealand body corporate through the acquisition outside New Zealand of the assets of a business or shares; and
  2. the acquisition has, or is likely to have, the effect of substantially lessening competition in a market in New Zealand.

Applications must be made within 12 months of the date of the acquisition. A declaration may not be made in respect of acquisitions that have been granted clearance or authorisation by the NZCC.

The Court has discretion, in granting a declaration, to make further orders requiring any New Zealand body corporate in which the overseas person has a controlling interest to, for example, cease carrying on business in a relevant New Zealand market, dispose of shares or other assets, or take any other action the Court considers is consistent with the purpose of the Act (see Section II.iv).

iv Overseas Investment Act 2005

The Overseas Investment Act 2005 (OIA) applies to acquisitions by 'overseas persons' of a 25 per cent or more direct or indirect ownership or controlling interest in significant business assets, 'sensitive' land or fishing quota. Under the OIA, consent must be obtained from the Overseas Investment Office for qualifying transactions.

For the purposes of the OIA, an overseas person includes:

  1. an individual who is not a New Zealand citizen and who is not ordinarily resident in New Zealand;
  2. a partnership, body corporate or trust where an overseas person or persons have 25 per cent or more ownership or control (based on composition of a governing body or beneficial ownership); and
  3. a company incorporated outside New Zealand, or in which an overseas person or persons hold 25 per cent or more of: any class of share; the power to control the company's governing body; or voting rights.

An acquisition of 'significant business assets' occurs when the total expenditure involved, or price paid, or gross value of the assets (including shares) of the company or property being acquired, exceeds NZ$100 million.2

v Joint ventures

The merger control regime extends to joint ventures that acquire shares or assets. Other purely contractual transactions engaged in by joint ventures (for example, long-term and exclusive contracts) are governed by the restrictive trade practices provisions of the Act.

vi Industry-specific merger control

The same merger control provision applies to all industries.


i Applications from mid-2018 to mid-2019

Over the past financial year, 11 applications for clearance were made to the NZCC.3 Of those applications, as at the time of writing, the NZCC had cleared nine applications (including one cleared subject to a divestment undertaking), had not declined any applications and was still processing one. One application was withdrawn by the applicant.

At the time of writing, the NZCC had received one application for authorisation, for which authorisation was granted.

ii Average time frames for clearance applications

Over the past financial year, the average time frame between registration of a clearance application and the NZCC's final decision was 67 working days. This is slightly quicker than in previous years, where the average number of working days to reach a decision was 77 in the 2017–2018 financial year and 82 in the 2016–2017 financial year. The sole authorisation application was determined in 67 working days.

iii Merger clearance decisions of interest

Merger clearance decisions of interest, published in the past 12 months, are described below.

Ingenico Group SA/Paymark Limited 4

In November 2018, following a seven-month review, the NZCC granted clearance for Ingenico Group SA (Ingenico) to acquire 100 per cent of the shares in Paymark Limited (Paymark). Ingenico and Paymark provide services that allow merchants to accept electronic payments.

Ingenico supplies physical payment terminals (which allow merchants to accept payments instore) and digital payment services (which allow merchants to accept payments online). Paymark's primary business is to provide a 'switch' that routes transactions from terminals or online payments to the relevant financial institution. It is the leading supplier of switching services in New Zealand. Ingencio competes against other suppliers of terminals and digital payment services. The vertical merger with Paymark would make Ingenico a supplier of switching services to those suppliers.

The NZCC's main focus was assessing whether the vertical merger of Paymark's switch with Ingenico's terminal business would be likely to give the merged entity the ability and incentive to inhibit rivals that supply terminals from competing by raising the cost of switching services to those suppliers.

The payment systems market is complex and includes the introduction of new payment systems technology. The NZCC described balancing the potential benefits and risks of the merged entity adopting a foreclosure strategy as a 'complex exercise' requiring consideration of how rivals, merchants, terminals and banks would react if terminals became less attractive. The NZCC ultimately concluded that the cumulative impact of the constraints that the merged entity would face meant that it was unlikely to engage in foreclosure to the point where it would result in a substantial lessening of competition.

First Gas Limited/GasNet Limited 5

A notable recent penalty for breach of the merger provisions of the Act was in relation to First Gas Limited's (First Gas) acquisition of certain assets from its competitor GasNet Limited (GasNet). The NZCC issued proceedings against First Gas after a nearly two-year investigation.

The NZCC alleged that First Gas engaged in anticompetitive conduct in acquiring the Bay of Plenty assets of GasNet. First Gas, which was a significantly larger gas distribution business than GasNet, allegedly took steps to retrofit gas pipelines where GasNet had already laid down its own pipes, acquired GasNet assets without clearance from the NZCC, and restrained GasNet from re-entering the Bay of Plenty region for five years. First Gas's actions resulted in a long-term structural change in the market, removing competition between First Gas and GasNet for new development contracts.

First Gas pleaded guilty and was fined NZ$3.4 million for breaches of the Act arising from the acquisition and related anticompetitive conduct. NZCC chair Dr Mark Berry said:

The penalty handed down by the High Court reflects the seriousness of this conduct and is sufficient to ensure that First Gas will not profit from the acquisition. It is also a reminder to businesses that anti-competitive acquisitions are a priority area for the Commission and if there is any doubt about the competition effects of a merger, they should seek clearance from us first.

iv Recent legislative changes

In the past 12 months there have been two significant changes to the Commerce Act. The Commerce (Criminalisation of Cartels) Amendment Act introduced a criminal offence for cartel conduct and the Commerce Amendment Act introduced a market studies regime.

The Commerce (Criminalisation of Cartels) Amendment Act was passed in April 2019. The Amendment Act amended the Commerce Act by introducing a new criminal offence for cartel conduct.

Following a two-year transition period, from 4 April 2021, an individual convicted for intentionally engaging in cartel conduct in breach of Section 30 of the Commerce Act will face a penalty of imprisonment for up to seven years, a criminal fine of up to NZ$500,000 (the same as the current maximum civil pecuniary penalty for an individual under the civil enforcement regime) or both.

Cartel conduct is entering into a contract or arrangement, or arriving at an understanding, with a competitor that has the purpose, effect or likely effect of price-fixing, restricting output or market allocation.

The new criminal offence requires that the individual intended to engage in cartel conduct, and it will not suffice that the individual's conduct had that effect or likely had that effect. Inadvertent behaviour will not give rise to criminal liability, but may still fall foul of the civil prohibitions.

The Commerce Amendment Act was passed in October 2018. The Amendment Act amended the Commerce Act to empower the NZCC to conduct market studies (referred to as 'competition studies' in the Amendment Act), either on its own initiative or at the direction of the Minister of Commerce and Consumer Affairs. The introduction of a market studies regime has brought New Zealand into better alignment with competition regimes internationally, particularly those in Australia, the United Kingdom and Canada, where the national competition authorities also have the ability to conduct market studies. The NZCC is currently conducting its first market study into retail fuel.

There have not been any changes to the merger control provisions of the Commerce Act during this period.


i Overview

The NZCC can either grant:

  1. clearance for a merger or acquisition if it is satisfied that the acquisition will not have, or would not be likely to have, the effect of substantially lessening competition in a market; or
  2. authorisation if it is satisfied that the merger or acquisition will result, or is likely to result, in such benefit to the public that it should be permitted.

ii Competition assessment

The NZCC assesses applications for merger clearance by applying a 'with and without test' – comparing the likely state of competition with the merger (the factual) with the likely state of competition without the merger (the counterfactual).

The NZCC considers the possible range of scenarios with and without the merger, discards those it concludes are unlikely, and compares the most competitive likely 'without the merger' scenario with the likely 'with the merger' scenario. It describes this as a 'worst case' scenario, on the basis that if the scenario that gives rise to the greatest competition concerns does not result in a substantial lessening of competition, none of the other likely scenarios will.

The test the NZCC ultimately applies is 'if we are not satisfied that competition would not be substantially lessened, compared to any of the scenarios likely to arise without the merger, we must decline clearance'.

The NZCC considers:

  1. the constraint on the merged entity (and market generally) from existing and potential competitors (including imports);
  2. conditions of market entry and expansion;
  3. the countervailing power of buyers;
  4. any enhancement in the ability of the remaining competitors to collude (either expressly or tacitly); and
  5. whether the transaction removes a particularly aggressive or destabilising competitor.

iii Filing requirements and thresholds

The Mergers and Acquisitions Guidelines specify the following concentration indicators. An acquisition is unlikely to raise competition concerns if, post-merger:

  1. the merged entity would have less than a 40 per cent market share and the three largest firms (i.e., the merged entity and the two nearest players) together would have less than 70 per cent of the relevant market; or
  2. the merged entity would have less than a 20 per cent share in a market where the three largest firms together would have more than 70 per cent of the relevant market.

The concentration indicators are merely an administrative screening tool; while the NZCC recommends seeking clearance if the indicators are exceeded, the majority of mergers that are granted clearance exceed the concentration indicators.

iv Process for seeking clearance

Applications for clearance must be made in the prescribed form and be filed with the NZCC with the statutory filing fee of NZ$3,680. The statutory time frame for a clearance decision is 40 working days. The NZCC can agree an extension of time with the applicant, which typically occurs in more complex cases.

The NZCC encourages parties to provide advance notice of clearance applications to the NZCC and to engage in confidential pre-notification discussions with the NZCC.

The NZCC generally publishes a statement of preliminary issues on its website at an early stage of its investigation when considering an application for clearance. It also seeks information from competitors, suppliers, customers and any other interested parties and interviews the applicant and vendor.

Following this public consultation process, the NZCC may send a letter of issues to the applicant seeking further information and highlighting initial competition concerns, giving the applicant and vendor an opportunity to address these concerns.

In complex cases where issues remain unresolved, a subsequent letter of unresolved issues may be sent at the 40-working-day stage. This may be the final opportunity for the applicant to provide evidence to allay the NZCC's concerns.

The actual time frame varies depending on the level of complexity of the acquisition and the analysis required. The time frame could be as short as three weeks for a straightforward merger and more than six months for a very complex merger. In the current financial year, the shortest time to complete an application was 35 working days, and the longest was 138 working days.

To address potential structural competition concerns, applicants may include divestment undertakings of specified assets or shares as part of an application (for example, if the merged entity's potential market power poses concerns in a particular product market or geographical area).

Such undertakings are deemed to form part of the clearance or authorisation, and approval is void if the undertaking is contravened. Accordingly, if the terms of the undertaking are breached, the NZCC may take enforcement action through the courts.

v Process for seeking authorisation

A party can apply for authorisation where there is a real risk that a proposed acquisition is likely to result in a substantial lessening of competition. If the NZCC is satisfied that the public benefits will outweigh the lessening of competition associated with the proposed acquisition, then it will grant authorisation.

The NZCC compares the benefits of the acquisition against likely counterfactuals. Section 3A of the Act provides that, when assessing public benefits, the NZCC is required to have regard to any efficiencies that will result or will be likely to result. In the past, the NZCC has stated that public benefits can be derived from:

  1. economies of scale;
  2. economies of scope;
  3. better utilisation of existing capacity; and
  4. cost reductions, including those due to reduced labour costs, greater specialisation of production, lower working capital and reduced transaction costs.

The 'public' is the public of New Zealand. Benefits to foreigners are counted, but only to the extent that they also benefit New Zealanders.

Overall, public benefits are net gains in economic terms. The NZCC applies a total welfare test, and transfers of wealth between groups of New Zealanders are generally ignored. The authorisation application process requires the public benefits to be quantified, usually through detailed economic evidence.

The NZCC follows the below process for investigating and considering an authorisation application:

  1. the NZCC engages with the applicant in pre-notification discussions;
  2. the authorisation application is registered and a public version is published on the NZCC's website;
  3. submissions from interested parties are received and considered by the NZCC, and public versions are published on the NZCC's website;
  4. the NZCC publishes a draft determination on which further submissions may be lodged and considered;
  5. the NZCC may hold a 'conference' to discuss issues raised by the application, if it thinks this would be useful; and
  6. a final decision is made by the NZCC to grant or decline to grant authorisation, based on all the evidence received or gathered, and a public version of the decision is published.

The authorisation process is both more time consuming (with a 60-statutory-working-day period, subject to extensions), and more expensive than the clearance process (the application fee is NZ$36,800).

As a result of these factors, in 2009 the NZCC introduced a new streamlined authorisation process for proposed acquisitions that have clear public benefits and a limited impact on competition. The streamlined process has a statutory time period of 40 working days. To date, the streamlined process has not been used for authorisation of a merger.

vi Remedies

A wide range of remedies are available to the NZCC in the event it considers that a merger is likely to substantially lessen competition. These include prosecution and the ability to seek significant penalties of up to NZ$5 million for companies and NZ$500,000 for individuals.

The NZCC may also apply to the High Court for a divestment order in relation to any of the shares or assets specified in the order. The NZCC's principal counsel (Competition) has described divestment, which is required in 10 per cent of cases, as a blunt remedy.6

In addition, any person (but most likely a competitor of the acquiring company) may:

  1. apply to the High Court for an injunction preventing an acquisition or attempted acquisition;
  2. bring an action for damages suffered as a consequence of an acquisition in breach of the Act; and
  3. apply to the High Court for a declaration that a proposed acquisition would breach the Act.

vii Appeals

A decision of the NZCC to grant, or decline to grant, clearance or authorisation can be appealed or can be subject to judicial review proceedings in the High Court. Judicial review is the only option available to third parties affected by, but not involved in, a transaction that has been cleared or authorised by the NZCC.

Under Section 92 of the Act, the following persons may appeal against a clearance decision by the NZCC:

  1. the person who applied for the clearance; and
  2. any person whose assets or shares are proposed to be acquired.

In respect of an authorisation decision by the NZCC, the applicant and any other person who has a direct and significant interest in the application; and participated in the NZCC's processes leading up to the determination, may appeal.

NZME/Fairfax 7

In May 2017, the NZCC declined NZME and Fairfax's application for clearance and, alternatively, authorisation to merge their media operations in New Zealand. The merger would have combined New Zealand's two largest newspaper networks and news websites, with about 90 per cent of daily newspaper circulation, and the largest reach for online New Zealand news by a significant margin. The NZCC concluded that NZME and Fairfax were each other's closest competitors in both advertising and New Zealand news content production. The NZCC was of the view that the merger would remove the close rivalry seen in both those markets and result in readers and advertisers facing price increases along with a reduction in news quality.

The applicants had sought an authorisation for the merger in the alternative, on the basis that if a lessening of competition was final, the merger would result in such a benefit to the public that it should be permitted. Balancing the benefits and detriments of the merger, the NZCC thought that the quantifiable benefits (reduced operational costs) were far outweighed by the detriment flowing from a loss of media plurality (even though this could not be quantified).

The applicants appealed the decision not to grant clearance, arguing that the NZCC's approach to market definition was flawed. The applicants also appealed the decision not to grant authorisation, arguing that the NZCC did not have jurisdiction to consider detriments beyond economic or financial detriments and that, even if it were able to consider such detriments, the view on loss of media plurality was speculative.

The High Court dismissed the appeals. On the clearance issue, the Court concluded that the NZCC's approach was sound and that the merger would affect the news and advertising markets identified by the NZCC. On the authorisation issue, the Court endorsed the NZCC's approach and agreed with the NZCC that 'a substantial loss of media plurality would be virtually irreplaceable.'

The applicants appealed to the Court of Appeal, which affirmed the High Court's decision, noting that the detriments of the merger clearly outweighed the benefits, and not by a small margin. The Court of Appeal agreed with the High Court that non-economic, unquantified detriments are to be taken into account when applying the test for authorisation and supported the High Court's reasoning that the loss of media plurality would very likely be irreparable.

viii Limitation period

Proceedings for penalties and damages in relation to the merger provisions can be commenced within three years after the matter giving rise to the contravention arose. Proceedings seeking a divestiture can be commenced within two years from the date on which the contravention occurred.

An appeal must be filed within 20 working days from the release by the NZCC of its written reasons for granting or declining to grant clearance.

ix Use of expert economists

Parties engage expert economists to prepare an expert economic report to submit to the NZCC where the application for clearance is particularly complex. In authorisation applications, such economic analysis is usually required to quantify the public benefits and detriments. Lay members (often economists) are appointed to assist judges of the High Court in certain competition law cases.


New Zealand's merger control regime is voluntary. This means the parties to a proposed acquisition must decide whether or not to make an application to the NZCC.

In some cases, the decision will be clear: where no competition concerns arise, a clearance will not be required, just as when a transaction gives rise to material aggregation, applying for clearance will be advisable to mitigate the risk of challenge.

Typically, key considerations include:

  1. whether the acquisition forms part of a global transaction that is being notified in overseas jurisdictions; and
  2. the profile of the industry and merging parties involved, and the likelihood of the transaction raising concerns for the NZCC.

Ultimately, the parties' appetite for risk will determine whether they decide to apply to the NZCC to obtain protection for their acquisition, or whether they prefer to proceed without that protection.

The NZCC has stated that the success of the voluntary clearance regime relies on the credible threat of enforcement proceedings for non-notified mergers that may substantially lessen competition. In the 12 months before and up to 31 March 2019, the NZCC opened four investigations into non-notified mergers. One of these investigations was closed after the purchaser agreed not to acquire certain assets of the target; the other three investigations were ongoing at the time of writing.

The NZCC established a public register of investigations into non-notified mergers in February 2018. The register contains investigations that were open at that time or have been opened subsequently, but does not include most investigations that were concluded prior. Accordingly, there is little historical data with which to compare the past 12 months.


i Proposed legislative changes

The NZCC is currently consulting on updates to its Mergers and Acquisitions Guidelines and the application form for merger clearance. Draft revised Mergers and Acquisition Guidelines and a draft revised clearance application form were published for consultation in January 2019, with feedback closing at the end of February 2019. At the time of writing, final revised guidelines had not been published.

Notable proposed changes in the draft guidelines include:

  1. an updated indicative clearance timeline;
  2. guidelines on conferences held for clearance applications;
  3. guidelines on non-notified merger investigations undertaken by the NZCC; and
  4. updates to the NZCC's approach to confidential information and access to information.

These proposed changes reflect that the NZCC is adopting a more transparent approach to merger control. The changes are also consistent with the NZCC's Priorities for 2018/2019, which include investigating non-notified mergers, following an increase in such mergers over recent years.

ii Pending applications

As at the time of writing, the NZCC is considering one application for clearance, which was registered in March 2019.

Mainland Print Limited/Inkwise Limited

The NZCC registered an application for Mainland Print Limited (Mainland) to acquire the heatset and coldset web offset printing assets of Inkwise Limited (Inkwise).

Mainland is a recent joint venture owned by Blue Star Group (New Zealand) Limited (Blue Star) and Allied Press Limited (Allied Press). Blue Star provides a range of commercial printing services including heatset printing services to magazine publishers and retail catalogue customers through its division, Webstar, located in Masterton and Auckland. Allied Press is a South Island publisher of daily newspapers with interests in newspaper printing operations in Dunedin, Alexandra and Greymouth. Allied Press also provides coldset printing services to other newspaper publishers.

Inkwise, based in Rolleston, provides heatset printing services to magazine publishers and retail catalogue customers, and coldset printing services to newspaper publishers.

The merger involves the market for the supply of coldset web offset printing in the South Island; and the national market for heatset offset printing services.

The NZCC is considering whether the proposed acquisition will:

  1. reduce competition through reducing or eliminating the constraint that suppliers of heatset and coldset printing services impose upon one another;
  2. change the conditions in the relevant markets so that coordination is more likely, more complete or more sustainable; or
  3. give Mainland, or its shareholders, the ability and incentive to foreclose rivals and render them less able to complete.


1 Ross Patterson and Oliver Meech are partners and Kristel McMeekin is a senior associate at MinterEllisonRuddWatts.

2 This may be amended to include an alternative monetary threshold in accordance with regulations if and when the Trans-Pacific Partnership Agreement comes into force in New Zealand.

3 The NZCC's financial year runs from 1 July to the following 30 June.

4 Ingenico Group SA and Paymark Limited [2018] NZCC 18 (2 November 2018).

5 Commerce Commission v. First Gas Limited [2019] NZHC 231.

6 'An insider's reflections on merger clearances', presentation to Law & Economics Association NZ, 26 April 2016, p. 12.

7 NZME Limited and Fairfax New Zealand Limited [2017] NZCC 8 (2 May 2017).