The Bell Gully Regulator Report lists recent changes, decisions and developments at the main New Zealand and Australian corporate, commercial and competition regulatory bodies. This edition covers the period from 6 July to 30 July 2007. For further details on any matter in this report, just click on the hyperlink below each item.

New Zealand Exchange (NZX)

ASIC consultation paper released - positive for AXE ECN
The Australian Securities and Investments Commission has released a consultation paper, inviting public submissions on the implications of competition for market services in Australia. This follows an Australian Market Licence application by AXE ECN, which will compete with the ASX on technology, market structure and the price of services. The Australian ECN is a joint venture between NZX, Citigroup, CommSec, Goldman Sachs JBWere, Macquarie Bank and Merrill Lynch.
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Click here to view this ASIC consultation paper

Ministry of Economic Development (MED)

SMEs in New Zealand: Structure and Dynamics 2007
MED has issued its eighth report on New Zealand�s small and medium sized enterprises (SMEs) examining their significance for the economy, their financial performance, the dynamics of SMEs and the significance of SMEs internationally.
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Securities Commission

Bridgecorp prospectuses
The Securities Commission suspended the registered prospectuses of Bridgecorp Limited and Bridgecorp Investments Limited on 29 June 2007, three days before Bridgecorp was placed in receivership. The Commission formally cancelled the prospectuses on 11 July 2007. The prospectuses (dated 21 December 2006) had become false or misleading because the companies failed to disclose that they could not meet their obligations to investors. The suspension obliged the companies to hold on trust any money subscribed by investors since 29 June.
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Securities Commission Statement of Intent � 2007-2010
The Securities Commission has released its Statement of Intent for 2007-2010. It sets out its main objectives for the next three years and how its achievements will be measured and presents forecast financial statements and a forecast statement of service performance for the next year.
Click here to access the Statement of Intent.

July issue of the Securities Commission's newsletter The Bulletin
The Securities Commission has released its July 2007 issue of The Bulletin. Items covered include:

• the Tranz Rail insider trading settlement;
• the suspension of the Bridgecorp prospectuses;
• a reminder on the importance of reporting on corporate governance practices; and
• a discussion on the Commission�s exemption powers under the Financial Reporting Act.

Click here to access the July issue of The Bulletin

Securities Act Exemption Notices

The following Securities Act exemption notices have been published:

• Securities Act (Overseas Employee Share Purchase Schemes) Exemption Amendment Notice (No 3) 2007/198
  This notice amends the Securities Act (Overseas Employee Share Purchase Schemes) Exemption Notice 2002 to include Austria as a specified overseas jurisdiction for overseas issuers for the purposes of that notice.

• Securities Act (Belgrave First Management Limited and Covenant Trustee Company Limited) Exemption Amendment Notice 2007/200
  This notice amends the Securities Act (Belgrave First Management Limited and Covenant Trustee Company Limited) Exemption Notice 2006 (the principal notice) to change the name of the unit trust referred to in the principal notice from Belgrave First Mortgage Capital Insured Fund to Belgrave Insured First Mortgage Fund.

Takeovers Panel

Takeovers Panel Statement of Intent � 2007-2010
The Takeovers Panel has released its Statement of Intent for 2007-2010. It notes that in 2007/08 and future years the Panel's enforcement role will be significantly expanded by changes to the Takeovers Code through the Takeovers Amendment Act 2006, particularly concerning the prohibition on misleading or deceptive conduct in takeover transactions. The Panel notes that it has been preparing for these changes by developing policies for dealing with complaints that may arise under the expanded provisions of the Code and by researching the law underlying the new provisions. The Statement also notes that a new area of enforcement activity in 2007/2008 and beyond through intervention in transactions where the scheme of arrangement and amalgamation provisions of the Companies Act are used to attempt to effect changes of control of Code companies.

Click here to access this Statement of Intent

Takeovers Code Exemption Notices

The following Takeovers Code (the Code) exemption notices have been published:

• Takeovers Code (Sealegs Corporation Limited) Exemption Notice 2007/187
  This notice applies to acts or omissions occurring on or after 5 July 2007 and expires on 31 July 2013. The Takeovers Panel has granted exemptions, subject to conditions, to: David McKee Wright and Maurice Bryham from rule 7(d) of the Code to the extent that rule 7(d) requires the notice of meeting to be in accordance with rule 16(b) and (d) of the Code in respect of any increase in the percentage of voting rights held in Sealegs Corporation Limited on the exercise of the options held by them; and Sealegs from rule 16(b) and (d) of the Code in respect of the notice of meeting.

• Takeovers Code (Kidicorp Group Limited) Exemption Notice 2007/188
  The trustees of the Mitchell Investment Trust hold or control 54.5% of the shares in Kidicorp Group Limited. The Takeovers Panel has exempted the Mitchell Trustees from compliance with rule 35 of the Code, which prevents the offeror, and persons acting jointly or in concert with the offeror, from disposing of any target company securities during the offer period other than to a competing bidder. This notice applies to acts or omissions occurring on or after 28 June 2007.

• Takeovers Code (Software of Excellence International Limited) Exemption Notice 2007/193
  This notice applies to acts or omissions occurring on or after 15 June 2007 and expires on the close of 9 November 2007. The Takeovers Panel has exempted Henry Schein New Zealand from compliance with rule 6(1) of the Code in relation to the conversion of mandatory convertible notes acquired under its full offer or all of the equity securities in Software of Excellence International Limited.

• Takeovers Code (The Todd Corporation Limited) Exemption Notice 2007/194 and Takeovers Code (The Todd Corporation Limited) Exemption Notice (No 2) 2007/195
  These notices apply to acts or omissions occurring on or after 12 July 2007, and expire on 12 July 2011 and 31 August 2007, respectively. These notices exempt any person, subject to conditions, from rule 6(1) of the Code in respect of that person becoming the holder or controller of an increased percentage of voting rights in The Todd Corporation Limited as a result of a transfer of shares effected under clause 14.1 of the constitution of The Todd Corporation. One of the reasons that the Takeovers Panel has granted these exemptions is that all the recipients of transfers of shares in The Todd Corporation under the exemptions are members of a single extended family and therefore probably associates for the purposes of the Code. As such, the mechanisms provided in the Code for approval of increased shareholdings through transfers of shares are unworkable.

• Takeovers Code (Life Pharmacy Limited) Exemption Notice 2007/199
  The Takeovers Panel has granted exemptions to LPL Trustee Limited from rule 7(d) of the Code and Life Pharmacy from rule 16(b) and (d) of the Code, in respect of the notice of meeting. This notice applies to acts or omissions occurring on or after 15 June 2007 and expires on 31 August 2009.

Companies Office

Incorporating a new company � applying for an IRD number and registering for GST
The Companies Office and Inland Revenue have launched a new service allowing individuals to apply for a company IRD number and register for GST when incorporating a new company online with the Companies Office. The IRD number and GST confirmation will be sent with the Certificate of Incorporation via email from the Companies Office at the time of incorporation.
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New Zealand Commerce Commission (NZCC)

Media releases

The NZCC has issued the following media releases:

Mergers and Acquisitions

• Schering-Plough applies for clearance to acquire Organon BioSciences
  The NZCC has received an application from Schering-Plough Corporation seeking clearance to acquire 100% of the shares in, or assets of, Organon BioSciences N.V. In New Zealand, Organon BS operates as Organon, the human pharmaceutical business, and Intervet, the animal remedies business. Schering-Plough�s New Zealand animal health business operates as Schering-Plough Coopers.
  Click here for more

• ST Cigar Group applies for clearance to acquire Schimmelpenninck & Tabacofina
  The NZCC has received an application from ST Cigar Group Holding BV (STCGH) seeking clearance to acquire all of the shares in a Dutch company, Schimmelpenninck and through STCGH�s Dutch subsidiary company Henri Wintermans Cigars BV, the cigar trademarks owned by the Belgian company Tabacofina � Vander Elst N.V. (TVE) that are registered in New Zealand, Australia and Portugal.
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• Reasons for The Warehouse acquisition declines
  The NZCC has released its reasons for declining to grant clearance to the three Foodstuffs co-operatives or to Woolworths Limited to acquire up to 100% of the shares in, or assets of, The Warehouse Group Limited. Both applicants have lodged appeals against the decisions in the Wellington High Court.
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Telecommunications

• Telecommunications Act: Commerce Commission releases Draft Telecom TSO cost calculation for 2004/05 and 2005/06
  The NZCC has released draft telecommunication service obligations (TSO) determinations for the 2004/05 and 2005/06 years. They give its assessment of the net cost Telecom incurs in meeting its TSO obligation to provide local residential telephone service; and apportion the cost between Telecom and other operators whose networks are interconnected with the Telecom fixed network.
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• New bitstream access price for CallPlus and ihug
  The NZCC has amended its Decision 582, which sets the terms on which Telecom is required to provide a wholesale bitstream service to internet service providers CallPlus and ihug. The amended decision makes changes to the methodology for calculating the price payable to Telecom for the service.
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• New Telecommunications Commissioner begins five-year term
  Dr Ross Patterson has begun his five-year term as Telecommunications Commissioner. A New Zealand lawyer with a PhD in commercial law, his principal areas of expertise include competition law, telecommunications law, payment systems regulation and competition policy initiatives.
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• NZCC receives proposal from Telecom for Unbundled Bitstream Access Standard Terms Determination
  The NZCC has received a proposal from Telecom covering the non-price terms for Unbundled Bitstream Access Standard Terms Determination. Submissions on the proposal closed on 26 July 2007 and the NZCC will now prepare draft determinations incorporating price and non-price terms.
  Click here for more
  Click here to access Telecom�s proposal

Consumer issues

• Used car dealers fined for not displaying information cards
  Six car dealers in the lower North Island have paid a total of $10,940 in fines and court costs after failing to display Supplier Information Notices or SIN cards on used cars for sale. SIN cards give buyers information about a car�s make, model, year of manufacture, mileage and sale price, and must be displayed on any used car for sale by a dealer.
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• The Warehouse Financial Services latest to refund hidden credit card fees
  The NZCC has reached a settlement with The Warehouse Financial Services Limited which will see the company refund $120,000 to customers who paid hidden foreign exchange fees on its Value or Merit MasterCard cards. After reaching the settlement, the Commission withdrew all charges against The Warehouse Financial Services.
  Click here for more

Australian Competition and Consumer Commission (ACCC)

ACCC media releases

The ACCC has issued the following media releases:

Mergers and Acquisitions

• ACCC to conduct competition assessment of Macquarie Media deal
  The ACCC will conduct a competition assessment of Macquarie Media Group's proposed acquisition of Southern Cross Broadcasting. The ACMA has announced that it has approved applications from Macquarie Media Group to acquire Southern Cross Broadcasting and has accepted undertakings from Macquarie Media Group which require certain divestitures under the Broadcasting Services Act 1992.
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• ACCC not to intervene in Tattersall's acquisition of Golden Casket
  The ACCC has announced that it will not intervene in Tattersall's acquisition of Golden Casket Lottery Corporation after accepting an undertaking to divest Golden Casket subsidiary, Bounty Limited. Bounty and Tattersall's subsidiary, Maxgaming, are the only two suppliers of monitoring software to licensed electronic gaming machine monitors (LMOs) in Queensland.
  Click here for more

Market Behaviour

• Harvey Norman franchisee admits price comparisons may have misled
  Lunel Pty Ltd, which trades as Harvey Norman Electrical Noarlunga, has admitted to the ACCC that representations in its promotional advertising may have misled consumers. The admission is part of court-enforceable undertakings that Lunel has given to the ACCC.
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• United Air Lines to use all-inclusive price advertising
  United Air Lines has undertaken to include all taxes, levies and charges applicable to airline tickets in its advertising. United Air Lines has provided court enforceable undertakings to the ACCC after concerns were raised about its airfare advertising.
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• ACCC alleges misleading and deceptive conduct by Trading Post and Google
  The ACCC has instituted legal proceedings in the Federal Court, Sydney, against Trading Post Australia Pty Ltd, Google Inc, Google Ireland Limited and Google Australia Pty Ltd alleging misleading and deceptive conduct in relation to sponsored links that appeared on the Google website. The ACCC is alleging that Trading Post contravened the Trade Practices Act 1974 in 2005 when the business names "Kloster Ford" and "Charlestown Toyota" appeared in the title of Google-sponsored links to Trading Post's website. Kloster Ford and Charlestown Toyota are Newcastle car dealerships who compete against Trading Post in automotive sales.
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• ACCC proposes to allow collective administration of sound recording rights
  The ACCC has proposed conditions in a draft decision to re-authorise the Phonographic Performance Company of Australia Limited's collective licensing arrangements for the public performance or broadcast of sound recordings and music videos.
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• ACCC re-authorises Star Alliance programmes
  The ACCC has issued a determination granting authorisation to the Star Alliance for its Corporate Plus and Conventions Plus programmes for a period of five years. The programmes enable Star Alliance members to collectively offer discounts and incentives to potential corporate clients and convention organisers.
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• ACCC revokes Qantas authorisation to negotiate air tariffs
  The ACCC has decided to revoke the authorisation granted to Qantas Airlines Limited�s wholly-owned subsidiary Australia Asia Airlines in May 1992 by the Trade Practices Commission. The original authorisation allowed AAA to negotiate tariffs with China Airlines Limited on flights between Australia and Taiwan outside the International Air Transport Association.
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• AUD$9.1 million penalties for bid-rigging and price-fix cartels
  The Federal Court, Perth, has imposed penalties of more than AUD$9.1 million on 11 companies and 18 individuals for a series of illegal bid-rigging and price fixing cartels in commercial air conditioning and mechanical services industry.
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• ACCC publishes chart showing petrol price movements
  The ACCC has placed on its website a chart showing movements in domestic petrol prices compared with movements in international benchmark prices to enable consumers to see the extent to which retail petrol prices in Australia are moving in line with the international benchmark price which the refiner/marketers in the Australia state that they follow.
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• Skateboard company stops resale price maintenance
  Kwala Skateboards Pty Ltd, a wholesaler of skateboards and skateboard merchandise to a large number of retailers throughout Australia, has given the ACCC court-enforceable undertakings over Kwala's pricing policy. In late 2006, the ACCC became aware that Kwala had advised a customer retailer that it would no longer be supplied with products unless the retailer raised the goods' price to at least Kwala's recommended retail price.
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Telecommunications

• ACCC publishes Telstra's exemption applications for wholesale line rental and local call resale
  The ACCC published exemption applications made by Telstra for its supply of wholesale line rental and local call resale services to a significant proportion of the Australian population. In its applications, Telstra seeks ACCC orders exempting it from the obligation to supply these wholesale products to its competitors upon request.
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• ACCC issues Telstra accounting separation report for March quarter 2007
  The ACCC issued its 15th imputation testing and non-price terms and conditions report under the enhanced accounting separation regime for Telstra, covering the quarter ending 31 March 2007.
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• ACCC alleges VIPtel Mobile telemarketing calls are misleading
  The ACCC has instituted proceedings in the Federal Court, Darwin, against EDirect Pty Ltd trading as VIPtel Mobile in relation to telemarketing calls for mobile phone packages. It is alleged EDirect telemarketed mobile phone packages into areas where there was no relevant network coverage while failing to advise prospective customers of the lack of coverage, provided consumers with misleading information regarding the costs and services included in the service plans in contravention of sections 52 of the Trade Practices Act 1974.
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Consumer issues

• Federal Court makes orders against internet tobacco supplier
  The Federal Court in Melbourne has made orders and declarations by consent against Mr Mina Guirguis, in relation to his contravention of the Trade Practices Act 1974 for failing to comply with the prescribed consumer product information standard for tobacco products.
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Access

• ACCC determination on Sydney water access dispute
  The ACCC issued its arbitration report over an access dispute between Services Sydney Pty Ltd and Sydney Water Corporation. The dispute related to the methodology for pricing access to declared sewage transportation services supplied by Sydney Water through its North Head, Bondi and Malabar sewerage reticulation networks.
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Reserve Bank of New Zealand

Reserve Bank announces changes to FX management
The Reserve Bank has announced changes to its financing and management of New Zealand�s foreign currency reserves. The moves arise from a review of the bank�s balance sheet, announced in its Statement of Intent in June 2006. The review was aimed at enabling the bank to manage its balance sheet to best meet monetary policy, currency, liquidity management and foreign reserves requirements.
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Submission on Future Monetary Policy Framework
The Reserve Bank has released its submission to the Finance and Expenditure Committee�s Inquiry into the Future Monetary Policy Framework.
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Bell Gully news

Entries open for New Zealand Hi-Tech Awards
Bell Gully is continuing its support for the New Zealand Hi-Tech Awards and this year is sponsoring the Flying Kiwi Award. Introduced in 2003, the award celebrates a New Zealander who has achieved significant success in the high tech sector for themselves and their organisation through immense and sustained personal effort. Read on

M&A deals continue to dominate
Thomson Financial has just released its 2007 half year M&A results which show a dramatic increase in the value of announced deals across Australasia. Brynn Gilbertson, the partner heading up Bell Gully's corporate practice, says the figures reflect the fact that M&A remains a consistently dominant feature of the business environment. Read on