‘No’ to offer on Petrocorp

Press, 23 March 1988, Page 35

‘No’ to offer on Petrocorp

H|| I ' 'll' ' | ■': [ f i PA ! j.-i, I jWellington The Commerce Commissiph yesterday declined Brierley ; Investments application to take over ; Petrocorp.;] j Tine] Comihission said the decision might be: re- : gard&d of richdhmic { in- : terest [only, since {the Governnjent ihad :{[ decided earlier this rriqnth to {sell its controlling j shareholding ; [in iPetrocorp to : Fletcher Challenge. : j i{ :| {if Brierley[(BlL) owned Petrocorp, j it: would have controlled :i all j of] [the wholesale and 74 per cent of tie retail I sales of'gas in the country] the! commiss tin’s deputy chairman :| Mr Ba'rrie Tucker, said in a statement. ! : [ | In I addition 1 it would have owned ] tlie main I trunc distribution pipe-' line.! ij 1 Hi | : ! h' i I ■ [ Tt e Government [had indicated, [ iri . | general terns], its] intention to deregulate [the! gas industry- l| "| | II!' ' i I" i Brierley had argued { thosi' intentions were so indefinite they should not be tiken into 1 account and the decision] should 1 be made in the current clim-i ate of price: I control,! franchised :j retail preaS, and! stringent ‘[take or pay’?: contracts. I ;[ j; I j H iwever, ; Mr [ Tucker said j the :i commission’s . view was that the Governmerts intention to deregulate was clear! in prin- i ciple. ' I :! [[{ ,i [' .{::[''! ' Si nee the Brierley takeover of Petrocorp, if appro) e d, would! {probably last for a long time, itjwas inappropriate to I consider it in the light of conditions which were virtually jeer-i

tain to change in the short ' keTm/T|{|l H 'J 11-l!! | The commission concluded the [proposal would involve the strengthening of existing dominance as Brierley alrjeridy is dominant in thrbe retail 'gas I markets] an^! Petnocorp is i already, dominant [in I the: North Island gas transmission market rind j [sevejrai retail gas markets. { J] Since these markets were within [the samje] [industry, the | merger; would resiilt in a number of anticompetitive I effects,[*| Mr Tucker said.' i: || JI | | To offset ) these detriments, Brierley liad{ submitted the ] mergeir wbuld have a number of public benefits, including I the ownership of thej gas industry by a New [Zealand company and a large number of BILI shareholders.. | i |i’ '. [ U. |{ IJ Even iif I these claims were accepted, they cduld probably !be claimed equally ] as welL | by: Fletcher) Challenge, Mr Tucker sai<J. . |: !;[ |' 1 11 On balance the Commission found the merger, if implemented woluld [not .have produced benefits to the public | which would [outweigh the detriments arising from! a dominant position ini the gas marM- jI'JJ |l:'':|h I Although! the [decision might have; little practical effect because the i Government had' now] sold its shareholding! in Petrocorp to FletcherrChallenge, the analysis contained in; tlie . [decision sei [out the commission’s stance bn competition questions : which often arose in similar controversial mergers, IMr Tucker said. | F;; ;! I' < H I I ill ( I : i • -.1 ■ ! • i .i ' I .-■