The announcement of the acquisition of Laga Industries Limited (Laga) a subsidiary of Steamships Limited by Paradise Company Limited (Paradise) a subsidiary of Nambawan Super Limited surprised the “Competition Watchdog”, the Independent Consumer and Competition Commission (ICCC).
The ICCC only became aware of the acquisition when it was reported in the daily newspapers on the 3rd of July 2018 and the ICCC is indeed disappointed that Nambawan Super Limited and Steamship Limited did not approach the ICCC.
The ICCC strongly condemns such corporate behaviour and will investigate the acquisition of Laga Industries Limited (“Laga”) by Paradise Company Limited (“Paradise”) to assess whether or not it would have any serious negative competition effects.
The ICCC Commissioner and Chief Executive Officer, Mr. Paulus Ain said, “Whilst the current pre-merger notification regime under the Independent Consumer and Competition Commission Act 2002 (“ICCC Act”) is voluntary, the ICCC is concerned that Paradise and Laga did not make an attempt to consult nor seek either Clearance or Authorization before completing this acquisition.”
Section 69 of the ICCC Act prohibits any person from acquiring the assets of a business or shares if that acquisition would, or would be likely to have, the effect of substantially lessening competition in a market. Therefore, in order to safe guard individuals and companies from breaching Section 69, it is advisable that they consult or seek appropriate approval from the ICCC before completing an acquisition.
Commissioner Ain further stated, “I am very concerned about the current trend of businesses discounting their corporate responsibility to take appropriate steps and liaise with the ICCC in advance of a potential merger, especially where there is some degree of competition between them.”
“I know Steamships Trading Company, as the previous owner of Laga, is well aware of the relevant provisions of the ICCC Act, especially where there are actual and potential overlaps between products produced by Laga and Paradise.”
“The fact that Steamships did not voluntarily notify the ICCC of its intention to sell Laga demonstrates their blatant disregard of the ICCC Act and the laws of PNG. The same could be said for Paradise.”
Commissioner Ain further said that it is because of the lack of transparency and ethic in the business community in PNG where a number of business mergers and acquisitions have been consummated without businesses notifying the ICCC in the first instance; the ICCC has recently proposed for Mandatory Notification of mergers and acquisition in PNG. The proposed mandatory notification amendments have gone through a wider public consultation process and is now before Parliament for approval. Once this is enacted into law, this will give the ICCC a greater regulatory control of business mergers and acquisitions that would be potentially anti-competitive.
The ICCC will be investigating the recent acquisition of Laga by Paradise; and will not hesitate to challenge it if the ICCC deems that the acquisition is likely to breach of Section 69 of the ICCC Act.