Mergers and accessory liability - a search for simplicity

Section 47 of the Commerce Act prohibits a person acquiring shares or assets of a business if that acquisition would, or would be likely to, substantially lessen competition in a market.

If a breach of the section occurs, it is primarily the buyer’s responsibility. But what about the seller or other parties involved in the transaction? The Court of Appeal recently considered this issue in New Zealand Bus Ltd v Commerce Commission [2007] NZCA 502.

In this Update, we briefly review what the High Court and Court of Appeal had to say on this issue and argue that accessory liability should only be imposed where a person has actual knowledge that a merger will breach section 47 (ie the person knows there is at least a real risk that the acquisition will substantially lessen competition in any market).