Watchdog's delay takes flak

The Commerce Commission is taking longer to deliver decisions on competition issues to the detriment of business and the public, law experts say.

Earlier this week, Fletcher Building said it feared Auckland building products firm W Stevenson and Sons would be snapped up by a competitor while it waited for the commission to explain why its application for clearance to buy the company had been declined. Fletcher said it needed the information so it could decide whether to appeal the decision.

Chapman Tripp partner and competition law specialist Andy Nichols said: "The commercial community is certainly noticing that it is taking time to, first, get a decision from the commission and, second, get their reasons ... everyone is aware that it takes longer than the 10 days set out in the Commerce Act."

Mark Williamson, of Phillips Fox in Auckland, calculated that in 2003 the average length of time taken over initial decisions by the commission was 17 working days. Last year that had increased to 31 working days.

"Looking at 2005 ... the trend is continuing to increase," he said.

"Timing is often everything in acquisitions and there is a danger that the increased length of time might provide a disincentive for parties to seek clearance."

Williamson also said there was a public benefit in businesses quickly obtaining certainty that their acquisitions did not breach the act.

"That's particularly important in the New Zealand market where there is a high degree of concentration of market share in a number of markets where acquisitions are taking place."

According to the act, the commission has 10 working days after an application to make a decision. However, that is usually extended by the permission of the applicant, which faces having its bid declined if it does not give the commission extra time.

Nichols said businesses were adopting a pragmatic approach by factoring a longer period into their plans and there was recognition that 10 days was insufficient for the quality of analysis required.

Nichols and Williamson said the increasing time the commission was taking to reach decisions was probably a result of the increasing complexity of the required analysis. But they said they wanted the process sped up.

Williamson also saw the delay as a resourcing issue. "I think the commission are pretty on to it ... but it's just probably a numbers game, in terms of numbers of applications for clearance."

Commission spokesperson Kate Camp said: "The clearance applications we receive tend to be those where there is uncertainty about whether a merger might be permitted or not, and these tend to be complex."