OECD kpcdb

1. Scope

 

As per Section 69, a merger or acquisition of assets or shares of a business are prohibited if it would have, or be likely to have, the effect of substantially lessening competition in a market in PNG. The ICCC has so far blocked six (6) mergers by declining either Clearance or Authorisation. The first merger court action is pending Court decision on an interlocutory application by the defendant. The substantive matter is yet to be heard. 

 

2. Notification

 

PNG operates a voluntary notification system. Where potentially anti-competitive mergers are concluded without seeking either a Clearance or an Authorisation, the ICCC can investigate them. Section 96 provides that the ICCC can apply for an injunction against a person who engages or intends to engage in conduct that would contravene Section 69. As mentioned, the first merger case is still pending hearing. 

 

An application for Clearance or Authorisation can be made to the ICCC for any proposed business acquisitions likely to inhibit competition.

 

Under Section 81 (3) (a), if the ICCC is satisfied that the acquisition will not have the effect of substantially lessening competition in a market, it will issue a clearance for the acquisition.

 

Under Section 82 (3) (b), if the ICCC is satisfied that, although the acquisition is likely to substantially lessen competition but there is net public benefit, then it will permit the acquisition to proceed. 

 

3. Procedural rules

 

The ICCC has 20 days in relation to a clearance application and 72 days for an authorisation application, to give its decision. In both cases, the time limit can be extended in certain circumstances. If the ICCC does not make a decision within the required timeframe, the clearance or authorisation is deemed to be granted. 

 

Procedural fairness: If a merger was not reported and an investigation was initiated to assess the implications on competition, the ICCC would give the parties opportunity to respond to some queries like the areas of business activities of the parties and their respective market share before the acquisition/merger.

 

During the course of such an investigation, the parties will not have access to how the investigation is conducted and concluded until the decision of the ICCC is relayed to them, whether or not to take legal action against them. The parties have the right to be heard and present evidence before a decision on a merger is reached.

 

4. Assessment

 

The legal test is whether the transaction leads to a substantial lessening of competition and if so, whether there is no overriding public benefit deriving from the transaction. 

 

In deciding if an acquisition would have the effect of substantially lessening competition in a market, Section 69(5) provides that the following matters are taken into account: (a) actual and potential level of import competition in the market; (b) nature and effect of barriers to entry in the market; (c) the number of buyers and sellers in the market; (d) the degree of countervailing power in the market; (e) the likelihood that the acquisition would result in the acquirer being able to significantly and sustainably increase prices or profit margins; (f) the extent to which substitutes are available, or are likely to be available in the market; (g) the dynamic characteristics of the market including growth, innovation and product differentiation; (h) the likelihood that the acquisition would result in the removal from the market of a sustainable, vigorous and effective competitor; (i) the nature and extent of vertical integration in the market.

 

5. Remedies and Sanctions

 

Under Section 85, in giving a clearance or granting an authorisation under Section 81 or Section 82, the ICCC may accept a written undertaking for disposal of assets or shares. An undertaking given to the ICCC is deemed to form part of the clearance given or the authorisation granted.

 

On application of the ICCC, the Court may, under Section 98 order the divestiture of assets or shares for a contravention of the business acquisition provisions under Section 69.

 

Section 95 (Pecuniary Penalties) stipulates that any person who contravenes Section 69 shall be ordered to pay a pecuniary penalty not exceeding PGK 500,000 (approximately USD 139,650) for individual, and PGK 10 M (approximately USD 2.8 M) for a body corporate.

 

Section 96 (Injunctions) sets forth that any person who intends to engage, or is engaging, or has engaged, in conduct that constitutes or would constitute a contravention of Section 69, the Court may grant an injunction restraining that person from engaging in conduct, or impose on any person obligations to be observed in the carrying on of any business or the safeguarding of any business or any assets of any business. 

 

Section 97 (Actions for Damages) provides for damages in relation to a contravention of Section 69 (business acquisitions). 

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).