COMMERCE COMMISSION V NEW ZEALAND BUS LIMITED HC WN CIV 2006-485-585

COMMERCE COMMISSION V NEW ZEALAND BUS LIMITED HC WN CIV 2006-485-585

The Court held the acquisition was likely to substantially lessen competition in the Wellington regional market because the factual (acquisition by NZ Bus) would eliminate likely vigorous entry by a third-party purchaser of Mana, creating a merged firm with ~97% of subsidised contracts by value and preserving incumbent advantages (local assets, information, tactical commercial registrations) that, within the relevant LET time horizon, make effective entry unlikely; accordingly the acquisition contravened s47. Vendors Kerry and Ian Waddell knowingly participated in the waiver of the clearance condition and were liable under s83; Infratil did not have the requisite actual knowledge to be...

Citation
openlaw-655fdbd5_1209_4139_a444_101e6983a21e.pdf
Parties
Plaintiff: Commerce Commission; First Defendant: New Zealand Bus Limited; Second Defendant: Blairgowrie Investments Limited; Second Defendant: Copland Neyland Associates Limited; Second Defendant: Rhoderick John Treadwell; Second Defendant: Kerry Leigh Waddell; Second Defendant: Karyn Justine Cosgrave; Second Defendant: Ian Waddell; Third Defendant: Infratil Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
29 June 2006
Procedural Posture
Action Under Commerce Act 1986 S47 and Accessory Liability S83 / Liability and Declarations Determined; Relief and Penalties Reserved; Timetable for Remedies to Be Set
Outcome
Declaration that NZ Bus' acquisition of the Waddell interests' 74% shareholding in Mana on 15 March 2006 contravened s47; declarations that Kerry Waddell and Ian Waddell contravened s83(1)(c) and s83(1)(e); Infratil not found accessory liable; relief and penalties reserved; costs awarded to Commerce Commission
Legal Topics
Merger Control, Market Definition, Counterfactual Analysis, Accessory Liability, Buyer Countervailing Power, Procurement Rules and Tendering
Competition Law Corporate/mergers Law Public Procurement Law Civil Remedies Merger Control Market Definition Counterfactual Analysis Accessory Liability +2 more

Case Brief

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Parties

Commerce Commission

Plaintiff

New Zealand Bus Limited

First Defendant

Blairgowrie Investments Limited

Second Defendant

Copland Neyland Associates Limited

Second Defendant

Rhoderick John Treadwell

Second Defendant

Kerry Leigh Waddell

Second Defendant

Karyn Justine Cosgrave

Second Defendant

Ian Waddell

Second Defendant

Infratil Limited

Third Defendant

Procedural Posture

Action Under Commerce Act 1986 S47 and Accessory Liability S83 / Liability and Declarations Determined; Relief and Penalties Reserved; Timetable for Remedies to Be Set

Legal Issues

  1. 1 Whether NZ Bus' acquisition of remaining 74% of Mana would substantially lessen competition in the market for rights to operate subsidised scheduled and school bus services in greater Wellington (excluding Wairarapa)
  2. 2 Proper geographic market (regional vs corridor/route markets)
  3. 3 Existence and significance of barriers/conditions of entry and application of LET test (Likely, Extent, Timely)

Ratio Decidendi

The Court held the acquisition was likely to substantially lessen competition in the Wellington regional market because the factual (acquisition by NZ Bus) would eliminate likely vigorous entry by a third-party purchaser of Mana, creating a merged firm with ~97% of subsidised contracts by value and preserving incumbent advantages (local assets, information, tactical commercial registrations) that, within the relevant LET time horizon, make effective entry unlikely; accordingly the acquisition contravened s47. Vendors Kerry and Ian Waddell knowingly participated in the waiver of the clearance condition and were liable under s83; Infratil did not have the requisite actual knowledge to be...

Court Disposition

Declaration that NZ Bus' acquisition of the Waddell interests' 74% shareholding in Mana on 15 March 2006 contravened s47; declarations that Kerry Waddell and Ian Waddell contravened s83(1)(c) and s83(1)(e); Infratil not found accessory liable; relief and penalties reserved; costs awarded to Commerce Commission

Orders

  • Declaration that acquisition of 74% of Mana by NZ Bus on 15 March 2006 is likely to substantially lessen competition in the Wellington regional market and contravened s47
  • Declaration that Kerry Waddell and Ian Waddell contravened s83(1)(c) and s83(1)(e) of the Commerce Act 1986