In the High Court of New Zealand Auckland Registry Civ-2017-404-230 [2017] Nzhc 238
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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2017-404-230 [2017] NZHC 238 UNDER the High Court Rules, Judicature Amendment Act 1972 and the Common Law IN THE MATTER of an application for interim orders BETWEEN SPARK NEW ZEALAND TRADING LIMITED Applicant AND COMMERCE COMMISSION First Respondent SKY NETWORK TELEVISION LIMITED Second Respondent VODAFONE NEW ZEALAND LIMITED Third Respondent VODAFONE EUROPE BV Fourth Respondent CIV-2017-404-228 UNDER the Judicature Act 1972 and the Common Law IN THE MATTER of an application for interim orders BETWEEN TWO DEGREES MOBILE LIMITED Applicant AND COMMERCE COMMISSION First Respondent SKY NETWORK TELEVISION LIMITED Second Respondent VODAFONE NEW ZEALAND SPARK NEW ZEALAND TRADING LIMITED v COMMERCE COMMISSION [2017] NZHC 238 [22 February 2017] LIMITED Third Respondent VODAFONE EUROPE BV Fourth Respondent Hearing: 22 February 2017 Appearances: D Shavin QC, S A Armstrong, S C Keene and C J Curran for Spark New Zealand Trading Ltd Z G Kennedy, R H Patterson and O J Skilton for Two Degrees Mobile J C L Dixon and M R Tilley for Commerce Commission T C Weston QC, L A OʼGorman and D T Broadmore for Sky Network Television Ltd A R Galbraith QC, D J Cooper and J Q Wilson for Vodafone New Zealand Ltd and Vodafone Europe BV M B Wigley for InternetNZ (granted leave to intervene by making submissions in support of the application for interim relief) Judgment: 22 February 2017 JUDGMENT OF LANG J [on application for interim relief] This judgment was delivered by me on 22 February 2017 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy Registrar Date…………… [1] These proceedings arise out of a decision by Sky Network Television Limited (Sky TV) and Vodafone New Zealand Limited (Vodafone) to merge their two businesses. Completion of the transactions will result in Sky TV owning 100 per cent of the shares in Vodafone, Vodafone Europe BV owning 51 per cent of the shares in Sky TV and the existing shareholders of Sky TV owning the balance. The proposal has already been approved by Sky TV’s shareholders by an overwhelming majority. [2] Sky TV and Vodafone applied in June 2016 to the Commerce Commission (the Commission) for clearance of the proposed transactions under s 66 of the Commerce Act 1986 (the Act). The Commission has announced that it will deliver its decision, but not its reasons, in respect of the application for clearance on Thursday 23 February 2017. [3] Two of Vodafone’s competitors, Spark New Zealand Limited (Spark) and Two Degrees Mobile Limited (Two Degrees) (the applicants) now seek urgent interim relief to enable them to give consideration to challenging the Commission’s decision in the event that it gives clearance for the transaction to proceed. Any challenge would be by way of judicial review proceedings. [4] The applicants are supported by InternetNZ, which describes itself as a not- for-profit organisation that represents the interests of consumers and internet users. I have granted InternetNZ leave to intervene to the extent that I have taken into account its submissions in reaching my decision. [5] Vodafone and Sky TV oppose the application for interim relief. They say there is no jurisdiction for the Court to grant relief and, even if there is, the Court should decline both applications. [6] The Commerce Commission abides the decision of the Court in relation to the applications for interim relief, but opposes any order being made that would interfere with the process it proposes to adopt in relation to the provisions of reasons for its decision. The need for urgency [7] The need for the Court to make its decision urgently arises in three ways. First, the Commission will release its decision at 8.30 am tomorrow morning. Secondly, the applicants apprehend that Vodafone and Sky TV will move quickly to implement the agreement they have reached to merge their respective businesses. The applicants are of that view because their counsel approached Vodafone and Sky TV seeking an assurance that they would refrain from completing the transactions for a short period to enable the applicants to consider their legal position. This was met with a negative response. [8] Furthermore, the Commission has declined a request that its decision be issued with delayed effect. The Commission has also declined a request by the applicants that it provide a confidential version of the reasons for its decision, available to counsel only, at the same time as it releases its decision tomorrow. [9] The present position is therefore that the Commission will release its decision early tomorrow morning, but it is not presently known when its reasons for that decision will be available. A further complicating factor is that the agreement between Sky TV and Vodafone contains a provision permitting either party to withdraw from the arrangement in the event that it has not been completed by 28 February 2017. [10] The brevity of my reasons reflects the need to provide the parties with an urgent decision. I record my gratitude to all counsel for delivering their submissions within a very truncated timeframe at the hearing this morning. The clearance decision [11] The Commission is established under the Act. It has the power to investigate and bring proceedings to prevent transactions occurring where they are unlikely to be for the long-term benefit of consumers in New Zealand. This may occur where a merger or acquisition is likely to produce a substantial lessening of competition in any particular market.1 [12] Parties to a proposed acquisition may apply to the Commission for clearance of the transaction. Where the Commission gives clearance to a transaction, actions by third parties to challenge it under the Act will be barred provided the transaction is completed within 12 months.2 Clearance therefore provides the parties to a proposed transaction with a statutory immunity from actions taken by both the Commission and any affected third party provided the transaction is implemented within that period. [13] The Commission is obliged to give clearance where it is satisfied that the transaction will not have, or not be likely to have, the effect of substantially lessening competition in a market.3 No right of appeal [14] Rights of appeal under the Act are enjoyed by the party seeking clearance to the transaction and/or the party whose assets or shares are to be acquired through it.4 Where an appeal is brought, the Court may stay the effect of the Commission’s decision pending determination of the appeal.5 [15] Where the Commission has issued a decision in respect of a clearance, however, third parties will only have a right of appeal where they have participated in a conference held by the Commission in relation to the clearance.6 In the present case the Commission did not hold such a conference but it permitted the applicants and InternetNZ to make submissions in respect of the application for clearance. For that reason the applicants have no right of appeal under the Act, and the Act does not provide the Court with the power to stay the effect of the Commission’s decision. It 1 Commerce Act 1986, ss 84 and 84A. 2 Section 69 3 Section 66. 4 Section 92(c). 5 Section 95(1) and see New Zealand Vegetable Growers Federation v Commerce Commission (No. 2) [1987] 2 NZLR 5 (HC). 6 Section 92(c)(iii). is for this reason that the applicants are required to mount any challenge to the Commission’s decision by judicial review. Judicial review [16] Judicial review focuses on the decision making process adopted by an entity that exercises a statutory power of decision. In general terms, review will only be available where the decision maker has taken into account irrelevant considerations, failed to take into account relevant considerations or has come to a decision that is plainly wrong. For that reason the focus in an application for judicial review is markedly different to that in a substantive appeal. [17] In the present case the applicants are obviously aware of the general process followed by the Commission in reaching its decision because they participated in that process. They have no way of knowing, however, the reasoning process that has led to the Commission reaching its decision. Furthermore, they will not receive that information for some time after the decision is delivered. [18] For obvious reasons the applicants cannot at this stage say how they would challenge any clearance decision. One potential area of challenge is likely to be on the Commission’s conclusions in respect of issues that it raised with Vodafone and Sky TV on 31 October 2016 in a letter headed “Unresolved Issues”. The applicants make the point that if the Commission has decided to grant clearance, it will obviously need to have determined these issues in favour of the respondents. They also express some concern about the Commission’s decision not to hold a conference, although they also appear to acknowledge that the Commission has not traditionally held conferences in relation to clearance applications in the past. The jurisdiction to grant interim relief under the Judicature Amendment Act 1972 [19] Not surprisingly, neither applicant has yet commenced an application for judicial review. Neither will do so unless the Commission grants clearance. In the event that the Commission declines to grant clearance, the present proceedings will obviously be rendered moot. [20] The purpose of the applications for interim relief is to preserve the ability of the applicants to bring meaningful applications for judicial review in the event that the Commission grants clearance.