KEY POINTS:
With industry commentators tipping the slowing economy will spark rationalisation in key sectors, competition regulator the Commerce Commission is acting to reduce the time it takes considering merger and acquisition transactions.
Yesterday it asked businesses for input on a set of guidelines it planned to publish for those seeking clearance for a merger or acquisition.
Chairwoman Paula Rebstock said the commission aimed to make robust decisions on clearance applications as quickly as possible to improve business certainty.
"These guidelines have been produced to help achieve robust and timely decisions by providing information about the process, the kinds of information that the commission requires and indicative timelines."
Commercial law experts have expressed concern that the time the commission takes to reach decisions was having a detrimental effect on businesses and the public.
Under the Commerce Act, the commission has 10 working days after an application to make a decision. However, that is usually extended by permission of the applicant, which faces having its bid declined if it does not give the commission extra time.
The commission's competition branch director, Deborah Battell, said the commission was "very aware" the business community wanted decisions as quickly and efficiently as possible and it had been working on streamlining the process for some time.
In fact the average number of working days taken over a decision had fallen from 45 during 2005-2006 to 37.8. That is, however, still well ahead of the 17 days reported for 2003.
Nevertheless, Battell said the commission's reduction in the time taken was achieved despite having slightly more applications of increasing complexity to deal with.
"We think there is an increasing concentration in markets which is leading to an increase in the number of applications where a merger or takeover will result in a reduction in competitors from three to one in a market or two to one. Those are much more difficult to deal with."
Rebstock said the commission had to balance business' desire for quick decisions against its own requirement for sufficient information "to allow it to make sound decisions that will ultimately benefit consumers".
While overall merger and acquisition activity is likely to slow as the economy cools, Chapman Tripp partner Grant David believed the slowdown would prompt "necessary rationalisation" in sectors such as ports. "As the going gets tougher I think you will see more significant rationalisation beginning to occur."
While the volume of applications was unlikely to pick up, the importance of those dealt with by the commission was likely to increase.
