The Independent Consumer and Competition Commission (“ICCC”) will commence an independent investigation into the acquisition of Bank South Pacific Capital Limited’s (“BSP Capital”) 62.5 percent shareholding in the Port Moresby Stock Exchange by Pacific Capital Markets Development Pty Ltd (“Pacific Capital”). BSP Capital is a subsidiary of Bank South Pacific Limited (“BSP”).
The ICCC was advised by BSP on the 30th November 2018, after concluding the transaction with Pacific Capital. Whilst they (BSP and Pacific Capital) may have complied with other relevant legislations and regulatory processes, it is indeed equally important for both parties to seek the ICCC’s clearance or authorisation on the acquisition.
ICCC Commissioner and CEO, Mr Paulus Ain said it is important for businesses to apply for Clearance or Authorisation from the ICCC to safeguard the concerned parties from potential legal action from the ICCC or any aggrieved third parties under the Independent Consumer and Competition Act 2002 (ICCC Act).
“I am really concerned that the parties have decided not to seek a clearance or authorisation from the ICCC knowing very well the requirements under the ICCC Act.”
“As a party to the transaction BSP is fully aware, under the previous arrangement, the ICCC administered a voluntary merger notification regime under the ICCC Act where businesses were not required to apply for Clearance or Authorisation for any proposed merger or acquisition.” Mr. Ain said.
“However, on the 25th July, 2018, the ICCC Act was amended by Parliament making it mandatory for parties to a merger or an acquisition to give notice seeking a clearance from the ICCC if the merger or acquisition fell within certain thresholds.”
These thresholds are: (1) that the transaction value of the merger or acquisition exceeds K50 million; or (2) that that the merger or acquisition is likely, or would be likely, to result in a market share increase of 50 percent or more, of the person who is acquiring.
According to Mr Ain, the acquisition would effectively result in Pacific Capital acquiring 62.5% (percent) percent of the market share within the Port Moresby Stock Exchange. This is well within the thresholds for giving a notice and seeking clearance from the ICCC.
Mr Ain, however, explained that the acquisition is not subject to the new thresholds because the new amended ICCC Act is still yet to be gazetted by the Governor-General.
“Once the new amendments are gazetted, the date of effect will be made retrospective to 24th November 2018 as requested by Government. However, it is likely that the date of effect could be the date of gazettal. Therefore, in order to safe guard businesses from the retrospective effective date of the new amendments, businesses are advised to consult the ICCC prior to completing any merger or acquisition.”
“For failure to give notice to seek clearance from the ICCC will result in an automatic fine of K750, 000.00 per the new amendments once gazetted. Thus, in the interim and to safeguard businesses from this potential effect, they should apply to the ICCC for a Clearance or Authorisation. All business houses in PNG are fully aware of the newly amended provisions of the ICCC Act, including BSP, as most of them have fully participated during the consultation process.”
Mr Ain reiterated that since the amendments were passed by Parliament on 25th of July this year, the ICCC has undertaken extensive awareness as well as consultation with the general public and businesses of the effects of these legislative changes.
“The new amendments apply to all sectors and industries of PNG’s economy. As a result, we have been advising law firms and other State regulators, to inform their clients to come to the ICCC first if they are in the process of completing a merger or acquisition. If businesses are uncertain about the competition law requirements of the ICCC Act, then they should consult the ICCC.”
Mr Ain further stated that the ICCC reserves its rights under the ICCC Act to investigate any consummated acquisitions and take legal action if it is satisfied that the acquisition would have the effect of substantially lessening competition in a market in PNG.