Brierley bids approved

Press, 12 October 1985, Page 23

Brierley bids approved

PA Wellington The Commerce Commission has approved two gas industry take-over applications made by the Brierley-controlled Weigas Holdings, Ltd. The commission said that if local people did not want control of their gas to fall to outsiders, they did not have to sell them their shares. The approvals allow Welgas to raise its stake in East Coast Gas Supply, Ltd, from 40 per cent to more than 50 per cent, and to raise its stake in the Auckland Gas Company, Ltd, from 24.9 per cent to up to 50 per cent Brierley Investments, Ltd, holds a 54.14 per cent shareholding in the Wellington-based Welgas, the capital’s gas supplier. In its decision the Commerce Commission said that under the Gas Act each gas utility had a statutory monopoly for the supply of gas In its geographical area ano none of the companies involved could operate In each other’s area. As a consequence there was no possibility that competition would be reduced or limited by the Welgas take-over proposals. The commission said most of the 12 supply authorities

throughout New Zealand were local bodies; only four were public companies. “Gas sold by all distribution authorities is price controlled. This factor of price control, together with the fixed market area of each company, led the Commission to conclude that the take-overs would have no adverse effects on the public Interest,” the decision said. “In addition to supplying gas, the companies also deal in the sale and servicing of gas appliances. "The Commission thought there might be some potential for Welgas to direct East Coast Gas and Auckland Gas to favour Welga’s own suppliers of this equipment, but has received firm written assurances from Welgas that the, two companies wul be perfectly free to continue to deal with their preferred supplier. “Some claims were made that it was preferable that control of a local utility should remain in local hands. "The Commission believes that such a decision is best made by the local shareholders. They are free to sell to Welgas if they so desire, but if they prefer local control of their gas company, then they are under no obligation to sell their shares to Welgas.”