Added Market Competition, Greater Efficiency or Productivity, or Enhanced Domestic Services in New Zealand

This factor under section 17(2)(a)(iv) of the Act is relevant to investments that:

• add more players and/or supply (quantity or quality) in a market that benefits consumers in New Zealand
• improve of use of an existing resource or asset
• increase the amount of goods or services produced
• improve an existing service or introduce a new service.

Added market competition means adding more players and/or supply (quantity or quality) in a market that benefits consumers in New Zealand. If the new dynamics of the industry result in the new player(s) being better placed to take on a dominant supplier and/or improve their productivity, added market competition can still occur even where the number of players/suppliers is reducing.

Greater efficiency is the improvement of use of an existing resource or asset (i.e. improving the input/output ratio).

Greater productivity is increasing the amount of goods or services produced. Increases in productivity typically result from increased efficiency and the introduction of new technology or business skills or the introduction of capital to expand the existing operations.

Domestic services are enhanced if the quality or quantity of an existing service is improved, or a new service is introduced. The service may be “down-stream” from the investment being considered. "Services" applies only to services, and does not include goods.

Report

The OIO requires a report detailing the extent to which the overseas investment will, or is likely to, result in added market competition, greater efficiency or productivity, or enhanced domestic services, in New Zealand.

In the case of “added market competition” the report should detail:

• the market in which competition will be added
• the method by which competition will be added
• the extent to which competition will be added
• if the investment also needs Commerce Commission approval, whether the Commerce Commission was satisfied that the proposed acquisition would not, or would not be likely, to substantially reduce competition in any relevant market. If the Commerce Commission requires some divestiture as a condition of approval, indicate what needs to be divested
• any uncertainties or contingencies relating to achievement of the benefits under this factor, and
• what benefits will or are likely accrue to New Zealand (or any part of it) or group of New Zealanders as a result of the added market competition.

In the case of “added greater efficiency or productivity” the report should detail:

• the market or industry in which there will be greater efficiency or productivity
• the method by which added greater efficiency or productivity will be achieved (for example, reduction in the cost of operations due to economies of scale)
• the extent to which there will be added greater efficiency or productivity
• the timeframe by, and over which, the added greater efficiency or productivity will occur
• projected changes in output (units or revenue) or profit
• projected input/output ratios (for example stock units/ha, net profit/ha), and
• what benefits will or are likely accrue to New Zealand (or any part of it) or group of New Zealanders as a result of the greater efficiency or productivity.

In the case of “enhanced domestic services” the report should detail:

• the nature of the domestic service that will be enhanced
• how it will be enhanced
• the extent to which it will be enhanced
• when it will be enhanced
• any uncertainties or contingencies relating to achievement of the benefits under this factor, and
• what benefits will or are likely to accrue to New Zealand (or any part of it) or group of New Zealanders as a result of the enhanced domestic services.

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