The Independent Consumer and Competition Commission (ICCC) says the proposed acquisition offer by Oil Search to buy 100 percent shares of Inter Oil Corporation may be harmful to competition.
Oil Search had made a bid of US$2.2 billion (K7 billion) and the decision of the offer will be known next month when Inter Oil convenes its annual general meeting next month.
Oil Search is a joint venture partner in the PNG LNG Project with the interest of 29 percent.
It also has a stake of 22 percent in the Papua LNG Project.
Given Oil Search as these interests, the ICCC is concerned that this proposed acquisition may substantially lessen competition in the gas markets in PNG.
ICCC commissioner Paulus Ain in a statement said: “ICCC therefore, is urging Oil Search and Inter Oil as a good corporate citizen of PNG to respect the country’s established statutory framework and seek relevant regulatory approval under the Independent Consumer and Competition Commission Act 1992 and be protected,”
Section 69 of the ICCC Act prohibits acquisition of assets or shares of a business that would have, or would be likely to have, the effect of sustainability lessen competition in the market.
“It is advisable to seek clearance or authorization earlier than later. Depending on the facts available, the ICCC may grant or decline granting the relevant approval Oil Search may apply for,” Ain said.
“If authorization or clearance is not sought, the ICCC reserve all its rights under the law, in this connection, not only does the ICCC Act provide for injunction, divestiture and pecuniary penalties against the parties involved, but the ICCC can also bring action against individuals if it is satisfied that a person is likely to have aided, abetted, counselled or procured any other person to contravene Section 69.
“There are large penalties involved which reflect the serious nature of illegal commercial behavior which recognized the great economic harm that can be caused anti-competitive business acquisition and other conduct prohibited by the ICCC Act,” the statement said.
Caption: ICCC commissioner Paulus Ain.