The Efficiencies Defence in Merger Analysis: A New Zealand Perspective

Abstract

New Zealand's current competition laws like Canada's are comparatively new. The Commerce Act (the "Act") and Canada's Competition Act were both passed in 1986. The New Zealand Act in essence recognises the efficiencies defence. Where a merger is likely to result in the acquisition of a dominant position in a market it is open to the merger parties to apply to the Commerce Commission (the "Commission") under section 67 for authorisation prior to implementation. This process requires the Commission to identify and weigh the detriments likely to flow from the acquiring of a dominant position in the relevant markets and to balance those against the public benefits likely to flow from the acquisition as a whole. Since 1990 there has been explicit statutory guidance under section 3A that efficiencies must be taken into account in assessing public benefits. If the Commission is satisfied that the benefits outweigh the detriments the proposed merger will be authorised.Thus there are striking similarities between the New Zealand position section 96 of the Canadian Competition Act and the US governmental guidelines described in Professor Mathewson's paper. What follows is an outline of the Commission's approach in New Zealand. This outline reflects a more tolerant approach than is apparently the case in Canada. Indeed seven mergers raising dominance concerns have already been authorised on public benefit grounds.