The Commerce Commission has issued final versions of its new M&A Guidelines and Authorisation Guidelines, which were consulted on earlier in the year. Although the new guidelines do not signal substantive changes in the Commission's approach, there are some noteworthy changes that have been highlighted by the Commission.
The new M&A Guidelines are intended to be a 'one-stop shop' for guidance on how the Commission assesses whether a transaction will substantially lessen competition, and the process for clearance applications. These new guidelines replace guidelines published in 2003, and provide more user-friendly and up-to-date guidance for parties contemplating mergers and acquisitions. Changes highlighted by the Commission include:
- More guidance on assessing whether competition is lessened: The new guidelines provide more detail about the counterfactual analysis used to assess whether a merger will substantially lessen competition (which involves comparing the likely state of competition if a merger proceeds against the likely state of competition if it does not).
- Market definition a tool for analysis, not the be all and end all: There is less emphasis on the importance of defining the relevant market in the new guidelines. Defining the relevant market is traditionally the first step in competition analysis. However, in line with case law and developments in other countries, the guidelines now describe market definition as "a tool to aid in competition analysis, rather than an end in itself" and recognise that relevant markets do not always need to be precisely defined.
- Mergers of competing buyers: Although the focus of the guidelines is on mergers of competing suppliers, the new guidelines provide a more detailed discussion on how the Commission assesses mergers between competing buyers than was included in the 2003 guidelines.
- The role of efficiencies: The new guidelines also clarify the Commission's approach to analysing efficiencies. However, the Commission continues to encourage the use of the authorisation regime if parties involved in a merger rely on the efficiencies (and the ultimate benefits to consumers) that it will create to justify a lessening of competition.
Changes to terminology: In addition to redrafting the guidelines in "plain English", the Commission has revised aspects of its terminology. The revisions, which do not reflect a change in substance, include:
- references to market share "safe harbours" have been replaced with the term "concentration indicators" to avoid the unwarranted degree of comfort that the former term provided
- the term "maverick" is no longer used to describe a vigorous and effective competitor, although the concept itself remains relevant
- the language "conditions of entry" replaces "barriers to entry" to reflect the Courts' use of this more expansive concept and to reflect the Commission's emphasis on the likelihood, extent and timeliness of entry and expansion by existing or new competitors.
The Authorisation Guidelines also provide a 'one-stop shop', setting out how the Commission assesses authorisation applications for transactions that are likely to substantially lessen competition. The key substantive change from the approach developed by the Commission since 1997 is that there is no longer a presumption that anti-competitive transactions will lead to a loss in productive and dynamic efficiency. Instead, the Commission states that it will now assess any such losses, and the magnitude of these, on a case-by-case basis.