Therefore, as at 24th November 2018 to date, all business mergers and acquisitions are subject to the new mandatory notification regime, as opposed to the former voluntary notification regime, subject to certain thresholds.
ICCC received the Notice of Commencement of the Independent Consumer and Competition Commission (Amendment) Act 2018 (No.9 of 2018) [the Amendment] on 6th June 2019.
Basically, the Amendment was passed by Parliament on 25th July 2018. It was certified by the Parliament on 7th September 2018.
As per the Gazettal Notice; 24th November 2018 is the date fixed on which the Amendment is deemed to have come into operation or took effect. A copy of the Gazettal Notice can be obtained directly from the Government Printing office.
The ICCC Act prohibits business mergers or acquisitions that would have, or would be likely to have, the effect of substantially lessening competition in a market in Papua New Guinea.
The Amendment requires mandatory notification prior to consummation of a business acquisition or merger.
The ICCC Commissioner and Chief Executive Officer, Paulus Ain, said the ICCC has been proposing for this mandatory notification regime for some time now due to ICCC’s experience with a number of business mergers and acquisitions which have been consummated without the business(s) notifying or consulting the ICCC in the prior to the consummation and which had led to legal action taken by the ICCC against those businesses.
“With this new mandatory notification regime, the ICCC is now in a better position to protect the interests of consumers in preventing acquisitions that could be detrimental to consumers and as well as to the economy as a whole,” said Ain.
“The ICCC is now able to tackle the issue of big companies acquiring smaller ones to have greater control of the market, particularly where businesses were deliberately taking advantage of the previous voluntary notification regime.”
Ain further added: “By having the mandatory notification regime in place, there will be increased liability and cooperation by businesses in providing relevant information or documentation to enable the ICCC to complete its review in a timely manner on behalf of the State.”
Ain says this new mandatory notification regime as per the Amendment entails the following:
- Mandatory notification is now required for business acquisition and mergers;
- Mandatory notification is now required for clearance of business acquisitions and mergers;
- There are key thresholds or conditions warranting the requirement of the mandatory notification;
- ICCC now has the power to impose conditions, revoke or amend any authorization determination that ICCC issues to applicants;
- ICCC can now direct businesses to submit an application for authorization. Previously, businesses had the option to apply for authorization or clearance. This mandatory notification regime provides that if the ICCC is of the view that an application for authorization must be submitted instead of a clearance application, it will notify the relevant parties to submit an application for authorization; and
- There is now a penalty provision for non-compliance.
Ain says: “Where the proposed acquisition meets either of the thresholds but the acquirer failed to notify the ICCC prior to the consummation of the acquisition, both parties to the acquisition will be fined K750,000.”
The ICCC appreciates that not all business acquisitions will pose competition concerns, hence, the thresholds are there to manage such circumstances. Ain strongly emphasises that “this, however, does not stop businesses whose circumstances do not meet the thresholds, to approach or consult ICCC, due to the fact that ICCC shall still take legal action if businesses are found by ICCC to be breaching Section 69 of the ICCC Act. It is therefore, advisable that businesses cooperate and work with the ICCC to ensure that they do not breach s69 of the ICCC Act”.
Given the new Amendment, the ICCC has developed three guidelines to assist businesses in their application to notify the ICCC. These guidelines are:
- The Confidentiality guideline;
- The Business Acquisitions Review guideline; and
- The Leniency Policy guideline.
The guidelines will soon be out for public use this year.
Ain encourages businesses to work with the ICCC at their earliest opportunity if they have any queries and concerns regarding a merger or an acquisition they intend to enter into.