Aust. Helenus action will test powers

Press, 22 August 1989, Page 28

Aust. Helenus action will test powers

NZPA-AAP Sydney

Action by the Trade Practices Commission (TPC) to prevent the BHP-led consortium, Helenus Corporation, from buying New Zealand Steel will test the operational powers of section 50A of the Trade Practices Act, according to the commission’s chairman, Mr Bob Baxt said. Section 50A deals with acquisitions or mergers that substantially reduce competition. The TPC, in its first trans-Tasman action, has made an application to the Trade Practices Tribunal over Helenus’s SNZ323 million offer, claiming the move could “substantially strengthen” BHP’s dominance of the Australian market for some steel products.

“It’s the first case (under section 50A), so I suppose in a sense it’s a test case,” Mr Baxt told Channel Nine’s “Business Sunday” programme.

“But we believe that the take-over is of such significance to a major industry in Australia that it would be inappropriate for the TPC not to have taken the kind of action it took.

“We believe the issues ... need to be exposed to a broader public investigation than would otherwise have been possible.”

Helenus’s rival NZ Steel bidder, Fletcher Challenge, has made a similar application to the Trade Practices Tribunal. Both Fletcher Challenge and the TPC believe BHP would be able to effectively control Helenus, although this is denied by BHP.

Helenus is owned by BHP (31%), Steel and Tube (25%), Fisher and Paykel (25%) and the ANZ Banking Group (19%), but Steel and Tube is owned 49.98 per cent by Tubemakers of Australia, which is in turn owned 49.75% by BHP.

As well as the Trade

Practices Tribunal hurdle, Helenus’s bid must get approval from the New Zealand Commerce Commission which has also found BHP could be in a position to control the consortium. Mr Baxt said he expected a legal challenge from BHP and the other consortium parties against the TPC’s move. But he also said the TPC would get involved in more trans-Tasman mergers and activities through section 50A because both the New Zealand and Australian Governments were committed to the Closer Economic Relations agreement. “Australian companies involving themselves in New Zealand acquisitions are certainly bringing into play the operation of CER and we think that we should take a very heavy and deep involvement in that,” he told “Business Sunday.”

Mr Baxt also said the TPC would keep a close

eye on any moves by Mr John Elliott’s, Elders IXL, through its finance arm, to take an interest in or finance a deal helping Mr Alan Bond’s Bond Corporation Holdings with its refinancing of Bell Resources and Bond brewing.

However, he said the TPC’s resources could be overstretched because it was still short of operational funding.

Mr Baxt said that if the TPC got new matters to handle such as work on deregulation, the waterfront and shipping it would have a real problem balancing its scarce resources.