Lloyd Morrison's Infratil has been told to cough up $1.1 million for breaching competition rules when it tried to take over Wellington bus operator Mana Coach Services.
It has been ordered to pay the Commerce Commission's $600,000 costs and fined $500,000. But the infrastructure investor has labelled the fine as
disproportionate and will appeal.
"We are disappointed. We think the penalty of $500,000 is grossly excessive," said Infratil executive Paul Ridley Smith.
Infratil's shares fell 2c yesterday to $4.10.
In January, the company applied for clearance to buy the 74 per cent share of Mana Coach that it did not already own. But in March, it withdrew the application and pushed ahead regardless on the $20 million deal. It says it decided against obtaining clearance partly because the commission could not make up its mind on whether the buy would breach the Commerce Act.
In June, the commission obtained an injunction against the acquisition. The court said Infratil's attempt to purchase the shares breached section 47 of the Commerce Act because it would have resulted in a substantial lessening of competition in Wellington bus services.
The commission also found the sellers of the shares - share broker Ian Waddell and his sister Kerry Waddell - had also breached the act by being parties to a prohibited acquisition. They were not fined but said yesterday they would appeal the decision to clear their names.
Commission general manager Geoff Thorn said the penalty showed that the voluntary clearance regime was robust.
"The stakes are high for companies planning acquisitions and mergers," Thorn said. "In commercial transactions, parties are likely to carefully weigh up the risks and benefits and there must be a credible threat that penalties for prohibited mergers will be imposed."
Under the voluntary merger clearance regime, companies can apply to the commission for a clearance to merge, which gives them reassurance the merger is legal.
