Kinetic Cleared To Acquire NZ Bus

The Commerce Commission has granted clearance for Kinetic NZ Holdings Limited (Kinetic) to acquire all of the shares in NZB Holdco Limited (NZ Bus).

Kinetic (through its Go Bus brand) and NZ Bus provide urban bus services in several locations throughout New Zealand. Kinetic also provides school bus services to the Ministry of Education. The rights to provide these services are determined by the Ministry of Education (for school bus services) and regional councils (for urban bus services), through competitive tender processes.

In reaching its decision, the Commission considered the potential impact of the proposed acquisition on future tenders for school and urban bus routes.

Deputy Chair Sue Begg says the Commission was satisfied that the acquisition is unlikely to substantially lessen competition in any New Zealand market.

“NZ Bus does not currently provide any school bus services to the Ministry of Education,” says Ms Begg. “While Go Bus and NZ Bus are potential competitors for future tenders to provide these services, we are satisfied that the merged entity will face competition from several existing competitors such as Ritchies and Tranzit.

“The evidence also suggests that the Ministry of Education is a sophisticated purchaser that is able to design tender processes to achieve competitive outcomes.”

In relation to urban bus tenders, Ms Begg says that in future tender rounds for urban bus routes, the Commission is satisfied that the merged entity is likely to face significant competition from rival bus companies such that a substantial lessening of competition is not likely.

“Our investigations indicated that, like the Ministry of Education, regional authorities are sophisticated purchasers and are able to design tender processes to achieve competitive outcomes,” Ms Begg says.

“In reaching our decision, the Commission had regard to possible changes to the way that school and urban bus services may be tendered in future, and the potential impact of requirements for complete decarbonisation of the public transport bus fleet by 2035.

“It is unclear at this stage how tender processes will change in future, but we do not consider that the merger will give the merged entity an undue advantage in relation to the electrification of fleets.”

A public version of the written reasons for the decision will be available on the Commission’s case register in due course.

Background

We will give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.

Further information explaining how the Commission assesses a merger application is available on our website.

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