Infratil's plan to dominate bus services stymied

Infratil's bid for dominance of Wellington's bus services market has been run off the road by the Commerce Commission in the High Court on the grounds that its proposed purchase of Mana Coach Services would establish a near monopoly.

In a judgment released yesterday, Justice Forrest Miller found that Infratil-owned NZ Bus Ltd's purchase of the remaining 74 per cent of Mana that it did not already own would have given it control of 97 per cent of the relevant market by value.

That would have effectively locked out new entrants. NZ Bus already owns Stagecoach.

NZ Bus breached the Commerce Act when its offer to buy the stake owned by Wellington stockbroker Ian Waddell and his sister Kerry Waddell, Mana's managing director, became unconditional, Justice Miller said.

The deal was reputedly worth $20 million to $22 million.

Infratil executive Paul Ridley-Smith said the company was surprised and disappointed and was examining the judgment for grounds for an appeal.

Shares in Infratil closed unchanged at $4.03.

Although Justice Miller found Mana and Stagecoach had a tacit agreement not to compete for subsidised bus service contracts, his decision preserved "the potential for competition" in the Wellington bus market, Commerce Commission chair Paula Rebstock said.

"Had this acquisition gone ahead, NZ Bus would have owned every major bus company in Wellington. This would have been bad news for competition, and for consumers.

"It would also have been bad news for Wellington ratepayers, who subsidise bus services through the Greater Wellington Regional Council."

Ms Rebstock said the case was important for credibility of the commission's voluntary clearance regime.

NZ Bus applied for clearance in January but withdrew its application when it became clear the commission had concerns about the deal.

"If companies come to the Commission for clearance and we express concerns, they must realise that simply withdrawing their clearance application and going ahead with the acquisition is not a responsible strategy," she said.

Ridley-Smith yesterday said the withdrawal of the application had nothing to do with the commission's concerns.

"We absolutely and firmly rebut such an insinuation. We withdrew because we did not believe we needed clearance."

Last month, Ian Waddell told the Business Herald his family was in a win win situation with regard to the commission's challenge of the sale.

"No matter how you look at it, we've still got a good business. We still own it and we still run it.

"If we don't sell it, we have a non-refundable deposit."

He also said other parties were interested in buying the business.

Justice Miller also found the Waddells had breached the act by being a party to the transaction, which could potentially see them facing a hefty fine, but Ridley-Smith said the chances of the commission seeking a penalty were "nil to nothing".