The Commerce Commission has completed a near two-year long investigation into Wilson Parking New Zealand Limited’s acquisition of rival Tournament Parking Limited’s parking leases and management agreements. Ultimately, the Commission said the evidence did not support a conclusion that the acquisition resulted in a substantial lessening of competition in breach of the Commerce Act.
The Commission was concerned the acquisition may have removed Wilson’s closest competitor in localised areas (with Wilson and Tournament being New Zealand’s largest car parking providers), enabling it to raise prices to the detriment of customers. The investigation focused on Symonds Street and Parnell Rise in Auckland, and Boulcott Street in Wellington. These being the areas where the Commission felt the acquisition would remove a significant competitive constraint.
Interestingly in this case, a Colmar Brunton survey of how car park users would react to a price rise was commissioned by the Commission to aid its assessment. Contrary to international literature and views expressed by other market participants, these survey results suggested that public transport may be sufficient to constrain Wilson’s ability to raise prices in the Auckland areas: enough consumers said they would switch to public transport in response to a five per cent increase in the price of car parking, making such a price increase unprofitable and therefore unlikely. In Wellington, the Commission concluded the existence of other competitors provided a sufficient constraint.
This investigation illustrates the Commission’s willingness to thoroughly investigate acquisitions for which a clearance has not been sought. While seeking clearance under the Commerce Act is voluntary, and there are a range of factors to consider, businesses should seriously consider doing so where potential competition issues are likely to arise. Otherwise, like Wilson, they could find themselves bogged down in a lengthy and time consuming investigation (and potential court proceedings), albeit one which delivered a positive result in this case.
A public version of the report can be viewed here.
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