The year in review

2024 was generally quiet for regulatory reviews of M&A activity in New Zealand under anti trust/competition law. There were only five clearance and authorisation applications (with one of those applications made under the authorisation provisions of the Commerce Act) filed, the quietest year in more than a decade and significantly fewer than the previous year’s 16.

2024 was generally quiet for regulatory reviews of M&A activity in New Zealand under anti-trust/competition law. There were only five clearance and authorisation applications (with one of those applications made under the authorisation provisions of the Commerce Act) filed, the quietest year in more than a decade and significantly fewer than the previous year’s 16.

The Commerce Commission also issued its first merger decline decisions since 2018, declining to clear the proposed acquisition of Serato Audio Research Ltd by AlphaTheta Corporation and the proposed merger of Foodstuffs South and North Island. Listen to our podcast on these decisions here. In addition, the Commission continued with the proceedings it filed in the High Court at the end of 2023 against Alderson Logistics and its related company alleging that historic unnotified acquisitions of rival businesses breached the Commerce Act.

We expect an increase in merger clearance applications as M&A activity increases. 

Continued scrutiny by the Commission of contested deals 

We expect to see greater scrutiny from the Commission in relation to M&A transactions, particularly those facing vocal opposition from market participants. This type of opposition was a significant factor in the Serato/AlphaTheta and Foodstuffs clearance decisions. We believe that it also played a significant role in the time it took for the Commission to come to a final decision on these transactions (almost 10 months for both applications). Foodstuffs is now appealing the Commission’s decline decision, and we expect the High Court on appeal will provide more clarity on the approach to competition analysis in buyside markets in its judgment. 

We may also see the Commission taking more enforcement action to block deals from closing (or to unwind historic deals) if it considers that transactions substantially lessen competition in relevant markets. While enforcement action against mergers is uncommon, the Commission has received a direction from the Minister of Commerce and Consumer Affairs to fully utilise its allocated litigation fund and is in ongoing proceedings against Alderson Logistics over alleged anti-competitive acquisitions which were not notified. 

Potential for merger reform

The Government has commenced a review of the Commerce Act with a focus on merger related provisions. We expect to see significant changes in the merger control space from this review. Notably, the Government stated that New Zealand’s current voluntary merger clearance regime is working well, and that a mandatory and suspensory regime like Australia is not required (see more on the Australian regime from our colleagues at MinterEllison here). However, the Government is considering following other aspects of Australia’s merger reform. Such considerations include clarifying the application of the substantial lessening of competition test and enabling the Commission to target serial or creeping acquisitions involving a series of small acquisitions (ie in the past three years) that may have the combined effect of substantially lessening competition. The Government is also considering amendments to give the Commission a ‘call in’ power for non-notified mergers and to allow the Commission to accept behavioural undertakings as a condition to granting clearance of mergers.

Update of Commission’s Mergers & Acquisitions Guidelines

It is likely the Commission will publish an updated version of its Mergers & Acquisitions Guidelines for public consultation in 2025. While the Commission has not confirmed it will seek to update its guidelines, given the commencement of the reform process, it has sought preliminary feedback on the issues it should consider if it decides to update them. This will be an important opportunity to provide feedback on the Commission’s substantive and procedural approach to merger reviews. These guidelines (while not binding) outline the general principles and frameworks the Commission uses when reviewing transactions under the Commerce Act and were last updated in 2022. 

Increased focus on M&A in concentrated sectors

We expect to see an increased focus on M&A activity in highly concentrated sectors next year. The Minister of Commerce and Consumer Affairs has raised concern about the need to prevent anti-competitive oligopolies following the Commission’s market studies into personal banking in 2023/2024 and grocery in 2021/2022. This could prompt the Government to explore new ways to manage competition in highly concentrated sectors similar to the approach adopted as part of the merger reforms in Australia where the Treasurer will be able to designate a class of acquisitions (e.g., in certain industries, such as grocery) as requiring notification to the competition regulator regardless of whether notification thresholds have been met.