The Bell Gully Regulator Report lists recent changes, decisions and developments at the main New Zealand and Australian corporate, commercial and competition regulatory bodies. This edition covers the period from 31 July to 16 August 2007. For further details on any matter in this report, just click on the hyperlink below each item.

New Zealand Exchange (NZX)

NZX Submission - Monetary Policy
NZX has made a submission to the Finance and Expenditure Committee for their Inquiry into the Future Monetary Policy Framework.
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Ministry of Economic Development

Submissions on the Review of Regulatory Control Provisions Under the Commerce Act 1986
MED has released copies of the submissions it received on its Review of Regulatory Control Provisions Under the Commerce Act 1986: Discussion Paper. The Discussion Paper sets out options for revising Parts 4, 4A and relevant sections of Part 5 of the Commerce Act. There are 44 submissions from a range of sectors, including a submission from the Commerce Commission.
Click here to access these submissions

Bell Gully responds to MED's review of the clearance and authorisation provisions under the Commerce Act 1986
Bell Gully has responded to the Ministry of Economic Development's discussion document: "Review of the Clearance and Authorisation Provisions under the Commerce Act 1986". Bell Gully made four key submissions on the current merger regime:

• the onus of proving a substantial lessening of competition should rest with the Commission, not the Applicant for clearance (an issue not specifically dealt with in the Discussion Document);

• the statutory number of working days for the Commission to reach a clearance decision should be increased to a more realistic 40 working days;

• the Commission should be legally required to publish written merger clearance decisions within a suggested timeframe of 15 working days; and

• the Commission should have the flexibility to accept behavioural undertakings in appropriate merger cases.

Bell Gully also submitted that a clearance process should be available for arrangements as well as for mergers.

Bell Gully's submission reflects the views of our competition law team who are well placed to comment on the procedural issues raised in the discussion document, given their regular dealings with the Commission on merger (and other) matters.
Click here to read Bell Gully's submissions in full

Securities Commission

Securities Commission review of class exemption notices - project report
The Securities Commission has now considered all exemption notices included in its current review of the class exemption notices expiring this year and those without expiry dates, along with all of the submissions it received on the notices. In most cases the Commission has agreed to renew the exemption notices on the same terms or with only minor amendments.
Click here to view the status of the exemption notices reviewed by the Securities Commission

Takeovers Panel

Code no barrier to airport takeover
The Independent Financial Review reported (on 15 August) that law changes proposed by the Takeovers Panel are likely to reach Parliament too late to threaten the proposed Auckland International Airport sale. The Panel is preparing a discussion paper on the issue of scheme arrangements and amalgamations being used to circumvent the shareholder protections in the Takeovers Code, following a formal request by the Minister of Commerce to lead the required policy work on the Panel's 2006 proposals. The Independent notes the Takeovers Panel's senior executive officer Kerry Morrell as saying the paper would go out for public consultation within a month, but it would be the end of the year before consultation was completed.
Click here to read the full article

Bell Gully Guide to the Takeovers Code
This guide provides a general overview of the issues relating to the making of, and responding to, takeover offers under the Takeovers Code. It has recently been updated to take into account the amendments made to the Takeovers Code by the Takeovers Amendment Act 2006 and the Takeovers Code Approval Amendment Regulations 2007.
Click here to access this guide

Takeovers Code Exemption Notices

The following Takeovers Code exemption notice has been published:

• Takeovers Code (Pharmacybrands Limited) Exemption Notice 2007/211
  This notice applies to acts or omissions occurring on or after 17 July 2007 and expires on 20 September 2007. The Takeovers Panel has granted an exemption to Cape Healthcare Limited (Cape Healthcare) from rule 6(1) of the Takeovers Code in respect of it becoming the holder or controller of voting rights in Pharmacybrands Limited, because the proposed transfer would not result in any effective change in control of the 66.69% parcel of shares that Cape Healthcare proposes to acquire.

New Zealand Commerce Commission (NZCC)

Media releases

The NZCC has issued the following media releases:

• New Zealand and Australian Commissions sign agreement
  The NZCC has signed a cooperation agreement with the Australian Competition and Consumer Commission (ACCC) that will make it easier for the two commissions to coordinate activities. The new agreement replaces a 1994 Memorandum of Understanding between the Commerce Commission and the ACCC's predecessor, the Trade Practices Commission. In 2006 the two Commissions signed up to a trans-Tasman merger protocol to facilitate decisions on mergers and acquisitions.
  Click here for more

Mergers and Acquisitions

• Southern Cross and QE Health apply for clearance to form a joint venture
  The NZCC has received an application from Southern Cross Health Trust and from QE Health Hospital Limited seeking clearance to merge their respective private hospital operations in Rotorua.
  Click here for more

• New Zealand Post and Salmat apply for clearance to form joint venture
  The NZCC has received an application from New Zealand Post Limited (NZ Post) and from Salmat International Pty Limited (Salmat) to merge their respective unaddressed mail delivery operations. NZ Post provides unaddressed mail delivery services through its wholly-owned subsidiary Letterbox Channel Limited. Salmat is listed on the Australian Stock Exchange, and is one of Australasia's major direct customer communications companies.
  Click here for more

• Transpacific Technical Services (NZ) Limited cleared to acquire the chemical smalls business of Medi-Chem Waste Services Limited
  The NZCC has cleared Transpacific Technical Services (NZ) Limited (TTS), or a wholly-owned subsidiary of TTS, to acquire the assets and businesses of Medi-Chem Waste Services Limited (Medi-Chem) that relate to the collection, treatment and disposal of hydrocarbon, miscellaneous chemical and intractable wastes (the 'chemical smalls' business).
  Click here for more

Telecommunications

• Draft determinations for unbundled local loop
  The NZCC has issued its draft determinations on the price and non-price terms on which Telecom must make unbundled copper local loop and co-location regulated services available to other telecommunications providers. These are the services required to unbundle the local loop. The NZCC's determinations are complete commercial agreements which will allow competitors to take the services from Telecom without the need for any separate agreements.
  Click here for more

• Draft report issued on regulation of mobile roaming
  The NZCC has issued its draft recommendations on whether to amend the roaming and co-location services currently regulated under the Telecommunications Act, or accept an undertaking from Vodafone as a suitable alternative to amending the regulations. The NZCC's draft recommendations are:
  • the non-price terms of the national roaming service should be altered and that it should become a designated service, i.e. subject to price regulation;
  • no change should be made to the co-location service; and
  • the Telecommunications Carriers' Forum make changes to the Co-Location Code to provide a dispute resolution mechanism for replacement costs, as well as apportioning the costs of co-location based on space utilisation.
  Click here for more

Consumer issues

• Commission investigates South Auckland credit providers
  The NZCC has warned six South Auckland credit providers, and will prosecute a seventh, for allegedly failing to provide important information to customers taking out personal loans. Adequate disclosure is required under the Credit Contracts and Consumer Finance Act (CCCF Act). The Commission found that the six warned credit providers allegedly failed to:
  • advise customers of their statutory right to cancel the loan within a certain period of time;
  • disclose the annual interest rate and the amount of interest payable;
  • advise customers of the costs of full prepayment; and
  • describe adequately property subject to security interests.
  Click here for more

   

• Loan company to refund over 2,000 customers
  In a settlement reached with the NZCC, Gilrose Finance Limited will return over $50,000 to 2,303 customers affected by breaches of the CCCF Act. Gilrose Finance admits it failed to correctly rebate credit-related insurance to some clients who had paid back their loans early, and did not tell customers about default fees that would be charged if they missed payments. Gilrose Finance provides finance to customers of a number of large New Zealand retailers.
  Click here for more

• Blenheim car dealer to refund customers over loans
  The Motor Centre admits it breached the CCCF Act when it failed to tell customers about their rights and obligations, and charged fees for services it did not perform. The Motor Centre charged fees between $3.00 and $35.00 to check the Personal Properties Security Register, but it did not carry out the checks and kept the money.
  Click here for more

• Ezibuy's throws not pure mohair
  In a settlement reached with the NZCC, Ezibuy has admitted that it has breached the Fair Trading Act by incorrectly advertising and selling an acrylic/mohair throw as a 'mohair throw' with 'pure mohair pile'. After receiving a complaint about the nature of the throw, the NZCC arranged for a sample of the throw to be tested. The results showed that the throw was 40% acrylic, 20% nylon, 30% mohair and 10% wool.
  Click here for more

• Commission warns truck 'shops' may be breaching credit law
  The NZCC has warned four companies operating mobile shops in the North Island that they may be breaching the CCCF Act by not disclosing important information to customers.
  Click here for more

Australian Competition and Consumer Commission (ACCC)

ACCC media releases

The ACCC has issued the following media releases:

• Canadian-Australian agencies strengthen cooperation
  The Canadian Competition Bureau and the ACCC have announced the conclusion of successful bilateral talks aimed at strengthening co-operation between the agencies. The two competition authorities have agreed to attack mass-marketing fraud together (which encompasses internet scams, fraudulent telemarketing and other attempts to deceive consumers), in partnership with other jurisdictions.
  Click here for more

• New 'must read' for all franchisees - The Franchisee Manual
  The ACCC has released The Franchisee Manual which it says is a 'must read' for all prospective franchisees. The Manual is a comprehensive publication that aims to assist people thinking about buying a franchise and also existing franchisees to understand and comply with the Franchising Code.
  Click here for more

Mergers and Acquisitions

• ACCC accepts pathology business divestitures in Healthscope Limited/Symbion Health Limited merger
  The ACCC will not oppose Healthscope Limited's proposed merger with Symbion Health Limited after accepting an undertaking from Healthscope to divest a number of pathology businesses in the north-eastern and Gippsland regions of Victoria.
  Click here for more

• ACCC opposes proposed joint venture of PMP and McPherson's book printing businesses
  The ACCC will oppose the proposed joint venture between Griffin Press, a wholly-owned subsidiary of PMP Ltd, and McPherson's Printing Division, a division of McPherson's Ltd. The ACCC has formed the view that the proposed joint venture is likely to substantially lessen competition for the supply of mono (black and white) offset book printing.
  Click here for more

• Comments sought on acquisition of Riverina Media Group by Fairfax
  On 15 August, the ACCC issued a Statement of Issues in relation to the acquisition of Riverina Media Group by Fairfax Media Limited/Rural Press. On 2 May 2007, Rural Press Limited acquired the Riverina Media Group. Fairfax acquired control of Rural Press on 9 May 2007. The ACCC was not informed of the acquisition by Rural Press and learned of the acquisition through the public announcement after its completion. The acquisition has been reviewed taking into account Fairfax's subsequent acquisition of Rural Press.
  Click here for more

• ACCC not to oppose acquisition of Alinta by Singapore Power and Babcock and Brown
  The ACCC has announced that it will not intervene in the acquisition of Alinta by a consortium involving Singapore Power and Babcock and Brown, after accepting court enforceable undertakings from Singapore Power and Babcock and Brown subsidiaries. Under the proposed scheme of arrangement by which the consortium would acquire Alinta, a suite of assets including Alinta's gas and electricity assets, a 35 per cent interest in the Australian Pipeline Trust, and shares in Australian Pipeline Limited, would be allocated between Singapore Power and Babcock and Brown.
  Click here for more

Market Behaviour

• ACCC proposes to authorise Casual Mall Licensing Code of Practice
  The ACCC has issued a draft determination proposing to grant authorisation to the Shopping Centre Council of Australia (SSCA) for its Casual Mall Licensing Code of Practice. The SCCA is a representative body for shopping centres throughout Australia. The code aims to provide balanced guidelines for casual mall licensing, where traders, generally for a short period, occupy part of the common area of shopping centres.
  Click here for more

• ACCC alleges resale price maintenance by Netti Atom
  The ACCC has instituted legal proceedings against Netti Atom Pty Ltd alleging the company engaged in resale price maintenance in relation to the range of Scott branded bicycles which Netti Atom imports and distributes to retailers throughout Australia. Netti Atom attempted to induce retailers to whom it supplies Scott bikes not to advertise the bikes on their websites below the recommended retail price specified by Netti Atom.
  Click here for more

• ACCC proposes to allow South Australian potato growers to collectively bargain
  The ACCC has issued a draft decision proposing to authorise South East Potato Growers Association members to collectively bargain the terms and conditions of their contracts with two potato processors, McCain Foods and Safries. The ACCC has stated that it believes the possible anti-competitive effect of the collective bargaining arrangement is limited as the proposed arrangement is completely voluntary for all parties.
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• ACCC obtains franchise fee refund for Quizno's franchisees
  The former Australian master franchisee for the Quizno's sub-chain of quick service restaurants has given court-enforceable undertakings after the ACCC raised concerns that Quizno's conduct may have breached the Trade Practices Act 1974 and adversely affected its franchisees. From about 2002 to 2006 Quiznos promoted and sold franchise territories in New South Wales, Victoria, Queensland and South Australia. The ACCC alleges that during this time Quiznos made various representations to franchisees and potential franchisees.
  Click here for more

• ACCC proposes to allow National Foods and Dairy Farmers to enter into a milk haulage arrangement in South Australia
  The ACCC has issued a draft determination proposing to authorise an agreement between National Foods and Dairy Farmers to jointly tender out their raw milk transportation requirements in some regions of South Australia. The ACCC considers that there is benefit to the public associated with savings and efficiencies in milk collection and improvements to the efficiency, quality and productivity of the milk processing businesses of National Foods and Dairy Farmers.
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• ACCC proposes to allow independent retailers of office products to collectively bargain with suppliers
  The ACCC has issued a draft decision proposing to authorise Office Choice Limited, Office National Limited and Office Products Depot Limited, together the Office Group, to collectively bargain the terms and conditions on which wholesale suppliers of stationery and office products will supply them and their franchisees. The ACCC considers that allowing the Office Group to negotiate the terms and conditions of the supply of office products through a single process, will enable wholesalers to provide them with products at a lower cost than they might otherwise be able.
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• Schedule of ACCC petrol inquiry public hearings announced
  The ACCC has announced the schedule of public hearings to be held as part of its inquiry into the price of unleaded petrol. Matters to be taken into consideration by the inquiry include the current structure of the industry, the extent of competition and current impediments to efficient petrol pricing.
  Click here for more

Telecommunications

• ACCC issues 2005-06 telecommunications market indicator report
  The ACCC has issued its annual report on telecommunications market indicators.
  Click here for more

• ACCC sets reasonable terms of access to the Line Sharing Service
  The ACCC has published a final determination made in the arbitration of a dispute over access to the Line Sharing Service.
  Click here for more

Consumer issues

• Publications for consumers
  The ACCC has released two new publications for consumers about:
  • refunds and warranties and warranties for services; and
    Click here for more
  • fair debt collection practices (published jointly with the Australian Securities and Investments Commission).
    Click here for more

Bell Gully news

Bell Gully's corporate partners highly ranked in M&A guide
Bell Gully's corporate partners top the rankings in the recently released Cross-border Mergers and Acquisitions Handbook 2007/08 published by the Practical Law Company. Gavin Macdonald ranked in the top tier as a leading lawyer. Highly recommended rankings went to David Boswell, Andrew Brown, David Flacks and Brynn Gilbertson with Peter Castle and Garry Downs both recommended.
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Partners talk finance law reform across Tasman
The implications for Australian-based business of the significant reform of New Zealand's finance sector law was on the agenda at a seminar held recently in Sydney. Bell Gully partners David Craig and Hugh Kettle briefed 70 Sydney-side lawyers and banking specialists on the changes and their impact on Australian entities doing business in New Zealand.
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Bell Gully key legal advisors on major global deal
Bell Gully has advised Fletcher Building on its major acquisition of United States-headquartered Formica Corporation. Fletcher Building, New Zealand's second largest listed company, signed an agreement on 22 May 2007 to buy Formica from private equity investors, Cerberus Capital Management LP and Oaktree Capital Management LLC, for NZ$1 billion (US$750 million).

A Bell Gully team of partners and lawyers led by Brynn Gilbertson and including Jayne Kirton, Murray King and Louise Hill, has been working with Fletcher Building on the transaction since October last year.
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