The Commerce Commission has opened an investigation into Swedish company Beijer Ref AB’s 2018 acquisition of Heatcraft NZ Ltd and its 2019 acquisition (via its subsidiary Kirby NZ Ltd) of a “grandparented” right to import hydrofluorocarbons (HFCs) into New Zealand.
Beijer sold the Heatcraft NZ business to Reece NZ Ltd soon after acquiring it in 2018, but retained the corporate vehicle, which has been renamed Kirby NZ Ltd.
The commission said on Friday it would consider whether competition was likely to have been substantially lessened in any relevant market in breach of sections 47 &/or 27 of the Commerce Act. Beijer didn’t apply for clearance for either the 2018 or 2019 acquisition.
Beijer (through its subsidiaries Realcold NZ Ltd & Patton Ltd) & Reece are major suppliers of refrigeration & air-conditioning equipment in New Zealand.
The commission said on Friday it was inviting parties who consider they hold relevant information to contact it by Friday 7 August.
The notification regime & clearance
Section 47 of the Commerce Act prohibits acquisitions that substantially lessen competition or are likely to lessen it. The commission’s voluntary notification regime allows firms to apply for clearance if they consider their planned acquisition could raise competition issues.
If firms don’t apply for clearance, the commission can initiate an investigation into a proposed or completed acquisition under section 47. If a person breaches section 47 they may be subject to a penalty of up to $500,000 for an individual or $5 million for a firm.
Section 27 of the Commerce Act prohibits agreements that have the purpose, effect or are likely to have the effect of substantially lessening competition. If the commission concludes that section 27 has been breached, the maximum penalty is $500,000 for an individual and, for a corporate, the greater of $10 million or 3 times the value of any commercial gain resulting from the contravention; or, if the commercial gain can’t be easily established, 10% of the turnover of the corporate & all its interconnected entities.
Attribution: Commission release.