Welcome to the first issue of the Bell Gully Regulator Report for 2009. The Regulator Report lists recent changes, decisions and developments at the main New Zealand corporate, commercial and competition regulatory bodies and also lists relevant updates from the Australian Competition and Consumer Commission. This edition of the Regulator Report covers the period from 18 December 2008 to 4 February 2009. For further details on any matter in this report, just click on the hyperlinks in each item.

The Treasury

Tax changes give businesses a helping hand
Small and medium sized businesses will benefit immediately from a series of new government tax assistance measures worth more than $480 million over the next four years say Finance Minister Bill English and Revenue Minister Peter Dunne. The changes that involve law changes will be included in a taxation bill to be introduced this month for application generally from 1 April 2009, or from the 2009/10 income year where appropriate.
Click here for the Government's press release
Click here for the fact sheet on the tax assistance package

Wholesale Guarantee Scheme fees reduced
Treasury Secretary John Whitehead announced a drop in fees for the Wholesale Funding Guarantee Scheme, effective from 27 January 2009. The fee for terms of one year and less has dropped by 15 basis points, and those for terms of more than one year by 50 basis points. The Wholesale Funding Guarantee Scheme was established to enable New Zealand financial institutions to access international markets in a risk averse global environment where many other governments have offered guarantees on their banks' wholesale debt.
Click here for more
Click here for Bell Gully commentary on the Crown guarantee scheme

Briefing to the Incoming Minister of Finance 2008: Economic and Fiscal Strategy
The Treasury has released its Briefing to the Incoming Minister of Finance 2008: Economic and Fiscal Strategy - Responding to Your Priorities. This briefing was prepared before the general election as a starting point to support the incoming Minister of Finance in developing the government's economic and fiscal strategy.
Click here for more

The Reserve Bank of New Zealand

Draft non-bank deposit takers policies
The Reserve Bank has released a Consultation Paper seeking comment on two proposed policies for non-bank deposit takers (NBDTs):

• related party requirements; and
• minimum capital ratio framework.

In September 2008, Parliament passed the Reserve Bank Amendment Act empowering the Reserve Bank as the prudential regulatory authority for NBDTs. The proposed scope of related party regulation as set out in the Consultation Paper includes:

• the definition of a related party;
• the definition of a related party exposure; and
• setting a maximum limit on aggregate exposure to related parties.

The minimum capital ratio framework has three main components:

• the definition and measurement of capital;
• the definition and measurement of risk exposures; and
• setting a minimum capital adequacy ratio.

Submissions on the Consultation Paper close on 9 February 2009, as regulations are targeted to be in place in the second quarter of 2009.
Click here for further details
Click here for a copy of the Consultation Paper

New bank registered
The Reserve Bank of New Zealand has announced that Australia and New Zealand Banking Group Limited has been registered as a bank in New Zealand. Australia and New Zealand Banking Group Limited, which is incorporated in Australia, and is the owner of ANZ National Bank Limited, will operate in a limited capacity as a branch in New Zealand. The status and lending activities of ANZ National Bank Limited in New Zealand are unaffected.
Click here for further details

Ministry of Economic Development (MED)

Help for small business owners
The Prime Minister has announced a series of initiatives to assist small businesses through the current economic difficulties. This includes expanding and promoting the advisory services available to business operators. The assistance includes a rejuvenated Biz 0800 hotline, free business health checks, and a free mentoring service.
Click here for the press release and fact sheet
Click here to visit the business health check website

Disputes Tribunal changes to help small business
The Disputes Tribunal jurisdiction is to be expanded in an effort to reduce the amount of time small businesses are tied up in district court battles.
Click here for more

Government departments to pay bills promptly
State Services Minister Tony Ryall has announced that government departments have been directed to make sure they pay their bills on time, or earlier, especially invoices from small and medium-sized business suppliers.
Click here for more

Trade credit changes to help exporters
Exporters potentially facing cancelled orders because of a lack of trade credit insurance will get relief through new measures announced by Trade Minister Tim Groser.
Click here for more

Ministry for the Environment

Phase one of the reform of the Resource Management Act
The Prime Minister, John Key, and the Minister for the Environment, Nick Smith, have released the Government's policies and proposals for a Resource Management (Simplify & Streamline) Amendment Bill 2009 which is expected to be introduced into Parliament in mid-February. The Bill represents the first of two phases of the Government's plan to reform the Resource Management Act (RMA). Under phase one, the amendments to the RMA involve:

• removing the scope for frivolous, vexatious and anti-competitive objections;
• setting up a transition to an Environmental Protection Authority (EPA) as an independent statutory office to centralise some regulatory roles which are best exercised on a nationwide basis;
• streamlining processes for projects of national significance;
• improving plan development and plan change processes;
• improving resource consent processes;
• streamlining decision making;
• improving workability and compliance; and
• improving national instruments.

Following the Bill's introduction into Parliament, the Bill will be referred to the Environment and Local Government Select Committee for public submission and hearings. It is expected the Bill will be enacted by September 2009.

Phase two will include further detailed work on the structure and functions of the EPA (which is expected to be concluded by July 2010). It will also deal with reforms relating to aquaculture, fresh water, urban design and infrastructure/Public Works Act.
Click here to read the press release and the Government's overview of phase one
Click here to read Bell Gully commentary on the proposed reforms

Emissions Trading Scheme Review
The Emissions Trading Scheme Review Committee has been established by the Government to review the Emissions Trading Scheme (ETS) and related matters. It held its first meeting on 18 December 2008 and has called for submissions with a closing date of 13 February 2009. Submissions may be on any of the Committee's terms of reference which are to:

• hear views from trade and diplomatic experts on the international relations aspects of this issue;
• consider the prospects for an international agreement on climate change post Kyoto 1, and the form such an agreement might take;
• require a high quality, quantified regulatory impact analysis to be produced to identify the net benefits or costs to New Zealand of any policy action, including international relations and commercial benefits and costs;
• identify the central/benchmark projections which are being used as the motivation for international agreements to combat climate change; and consider the uncertainties and risks surrounding these projections;
• consider the impact on the New Zealand economy and New Zealand households of any climate change policies, having regard to the weak state of the economy, the need to safeguard New Zealand's international competitiveness, the position of trade-exposed industries, and the actions of competing countries;
• examine the relative merits of a mitigation or adaptation approach to climate change for New Zealand;
• consider the case for increasing resources devoted to New Zealand-specific climate change research;
• examine the relative merits of an emissions trading scheme or a tax on carbon or energy as a New Zealand response to climate change;
• consider the need for any additional regulatory interventions to combat climate change if a price mechanism (an ETS or a tax) is introduced; and
• consider the timing of introduction of any New Zealand measures, with particular reference to the outcome of the December 2009 Copenhagen meeting, the position of the United States, and the timetable for decisions and their implementation of the Australian Government.

In securing ACT's support to form a government, National agreed to suspend the ETS set up under the Climate Change (Emissions Trading) Act 2008 while it carried out a review of the ETS. However, Prime Minster, John Key, has since told Parliament that the scheme will not be suspended while the review is being conducted.

The select committee is expected to report back in March 2009 and it is the Government's intention that the revised legislation will be passed by 30 September 2009 before the entry of the first business sectors into the scheme (other than forestry) commence in 2010.
Click here for the press release
Click here for details on the Select Committee
For Bell Gully commentary on the ETS scheme passed under the Labour government click here

Draft Forestry Allocation plan under the Emissions Trading Scheme
Submissions on the "Draft Forestry Allocation Plan" issued by the Minister Responsible for Climate Change Issues are due by 28 February 2009.

Under the current form of the Emissions Trading Scheme (ETS) all owners of pre-1990 forest land will need to decide in the first half of 2009 whether to:

• apply for an allocation of New Zealand Units (NZUs); or
• if eligible, apply to have land permanently exempt from the ETS (under the "less than 50 hectare" threshold exemption or the "tree weed exemption").

The first part of the document provides information about the pre-1990 forest land allocation policy and the pre-1990 forest exemption policies under the ETS. It is designed to help pre-1990 forest landowners decide whether to apply for either an allocation of NZUs or an exemption from the ETS. It elaborates on the information in the Draft Forestry Allocation Plan. The second part – the Draft Forestry Allocation Plan – is a statutory document. It includes only the information required under the Climate Change Response Act 2002 (the Act). The Draft Forestry Allocation Plan also includes important details which are required, but not prescribed, in the Act. Feedback is sought on these aspects of the Draft Forestry Allocation Plan.
Click here for further details
Click here for a copy of the Draft Forestry Allocation Plan and accompanying information document

Securities Commission

Updated guide on the trans-Tasman mutual recognition scheme for offers of securities
The Australian Securities and Investments Commission (ASIC) and the New Zealand Securities Commission have published a new joint guide for New Zealand and Australian issuers offering securities or interests in managed or collective investment schemes in both countries. It explains what issuers have to do under the trans-Tasman mutual recognition scheme for offers of securities introduced in June 2008. This version was issued on 21 January 2009 and is based on legislation and regulations as at 21 January 2009. It replaces an earlier version issued on 13 June 2008.
For further details click here

Discussion document: Exemptions for listed share purchase plans and rights offers
The Securities Commission has sought comments on three options for exemptions to assist listed issuers to raise capital through limited offers to existing shareholders. These options are:

• To raise the annual limit under the existing class exemption for small share and unit purchase plans (the Securities Act (NZX- Share and Unit Purchase Plans) Exemption Notice 2005).
• To grant an exemption so that listed issuers can issue shares up to 10% of their market capitalisation in any year, with a fixed amount offered to each shareholder and without a prospectus or investment statement.
• To grant an exemption allowing listed issuers to make a pro-rata rights offers up to 10% of the number of shares already on issue, without a prospectus or investment statement.

The consultation arises from a proposal made by the Capital Markets Development Taskforce to extend the Commission's existing class exemption for share and unit plans. Submissions on this consultation closed on 30 January 2009. However the Commission has indicated that it intends to consult further if it decides to amend its existing class exemption. It is the Commission's intention to have any changes in place in February 2009.
Click here to access the discussion document

Commission chairman on international advisory group
Securities Commission chairman Jane Diplock has been appointed to a high-level global advisory group looking at urgent financial reporting issues arising from the financial crisis. The Financial Crisis Advisory Group was set up in December by the International Accounting Standards Board and the United States Financial Accounting Standards Board. Its purpose is to advise the boards about standards setting implications of the global financial crisis and potential changes to the global regulatory environment.
Click here for more

Bridgecorp chairman and remaining directors charged
The Securities Commission has laid criminal charges against the chairman of Bridgecorp Bruce Davidson and non-executive directors Gary Urwin and Peter Steigrad. Criminal charges were laid by the Registrar of Companies earlier this year against the executive directors, Rodney Petricevic and Robert Roest. These new charges follow further investigations by the Commission. The Commission has also issued civil proceedings against all five directors.
Click here for more

Nathans Finance directors charged
The Securities Commission has laid criminal charges and issued civil proceedings against Nathans Finance directors John Hotchin, Donald Young and Kenneth Moses. Criminal charges and civil proceedings have also been filed against a fourth director believed to be resident in Australia. These proceedings follow investigations by the Commission since Nathans Finance went into receivership on 20 August 2007.
Click here for more

SECURITIES ACT EXEMPTION NOTICES

The following Securities Act Exemption Notices have been published for this period:

Securities Act (Fonterra Co-operative Group Limited) Exemption Notice 2009
This notice, which came into force on 23 January 2009 and expires on 30 June 2009, relates to an offer of debt securities to the public by Fonterra Co-operative Group Limited (Fonterra). The notice exempts Fonterra from clause 24(b)(i) of Schedule 2 of the Securities Regulations 1983, which would require the registered prospectus for the debt securities to show the total of investments in all non-guaranteeing subsidiaries at the lesser of cost (less amounts written off) or market value (if ascertainable). The exemption is subject to a condition that the total of these investments is stated in the registered prospectus at deemed cost, as recorded in the most recent published financial statements of Fonterra.

Securities Act (Directors' Certificates—Collective Investment Schemes) Exemption Notice 2008
This notice, which came into force on 19 December 2008, exempts, subject to conditions, the issuers of certain collective investment schemes from section 37A(1A)(c)(i) of the Securities Act 1978. The notice provides two exemptions from section 37A(1A)(c)(i) of the Securities Act 1978. The first exemption, which expires on 1 April 2009, does not require interim financial statements to be registered. The second exemption, which expires on 30 September 2009, applies where interim financial statements are registered.

Securities Act (ING (NZ) Administration Pty Limited) Exemption Notice 2008
This notice, which came into force on 19 December 2008 and expires on 1 April 2009, exempts ING (NZ) Administration Pty Limited (ING), subject to conditions, from clause 4(1)(a) of Schedule 7 of the Securities Regulations 1983. This means ING did not have to hold an annual meeting on or before 31 December 2008 to consider the financial statements of the ING Diversified Yield Fund and the ING Regular Income Fund (the schemes) for the year ending 30 June 2008.

Securities Act (Overseas Employee Share Purchase Schemes) Exemption Amendment Notice (No 4) 2008
This notice, which came into force on 19 December 2008, amends the Securities Act (Overseas Employee Share Purchase Schemes) Exemption Notice 2002 (the principal notice) to name Talgentra Pacific Group Pty Ltd as a specified overseas issuer for the purposes of that notice.

FINANCIAL REPORTING ACT EXEMPTION NOTICES

Under section 35A of the Financial Reporting Act 1993, the Securities Commission has issued the following Financial Reporting Act Exemption notice:

Financial Reporting Act (Overseas Issuers) Exemption Notice 2009
This notice, which came into force on 23 January 2009 and expires on 30 September 2012, exempts the directors of certain issuers incorporated in the United States of America and the United Kingdom from various provisions of the Financial Reporting Act 1993 (FRA). The notice is substantially similar to the Financial Reporting Act (Overseas Issuers—United States of America) Exemption Notice 2007 (which has been revoked by this notice), but is expanded so that it also applies to UK issuers. The effect of the exemptions is to allow issuers incorporated in the UK and the US that offer securities in New Zealand under the Securities Act (Overseas Employee Share Purchase Schemes) Exemption Notice 2002 or the Securities Act (Overseas Listed Issuers) Exemption Notice 2002 to provide financial statements that they are required to prepare under financial reporting requirements of their respective jurisdictions.

Takeovers Panel

TAKEOVERS CODE EXEMPTION NOTICES

The following Takeovers Code Exemption Notices have been published for this period:

Takeovers Code (ABN AMRO Craigs Limited) Exemption Notice 2008
This notice applies to acts or omissions occurring on or after 10 October 2007 and expires on 31 January 2009. It relates to increases in voting control in ABN AMRO Craigs Limited (AAC). The Takeovers Panel has granted exemptions from rule 6(1) of the Takeovers Code for:

• RFS Holdings BV (RFS) in respect of increases in its voting control in AAC resulting from RFS's takeover of ABN AMRO Holding N.V. (ABN AMRO) and RFS's subsequent acquisitions of shares in ABN AMRO;
• The Royal Bank of Scotland Group plc (RBS), Fortis Bank Nederland (Holding) N.V., and Banco Santander Central Hispano, S.A. in respect of the deemed increase to their voting control resulting from RFS's takeover of ABN AMRO and RFS's subsequent acquisitions of shares in ABN AMRO; and
• ABN AMRO, ABN AMRO Bank N.V., and RFS in respect of ABN AMRO Bank N.V.'s acquisition of the 25% of ABN AMRO Australia Holdings Pty Limited held by AAA Employee Plans Pty Limited and AANZ Employee Plans Limited (corporate trustees).

Electricity Commission

Release of Review of 2008 Winter Report
The Winter Review team, comprising David Hunt and John Isles has now completed its review of winter 2008 and has provided its report, Review of 2008 Winter, to the Electricity Commission. The report provides an overview of the 2008 winter events and the recommendations suggest the direction of future work. Almost all of the recommendations would require considerable work, including consultation with affected parties, before any implementation. Therefore the Commission has invited comments on the report, particularly on the priorities for ongoing work resulting from the recommendations. The closing date for these initial submissions is 20 February 2009. Once such work is underway in 2009 the Commission will seek comprehensive submissions on specific policy or rule changes in the usual way.
Click here for more

New Zealand Commerce Commission (NZCC)

Media releases

The NZCC has issued the following media releases:

Industry regulation and regulatory control

• Aerolineas Argentinas fined for non-compliance with Commerce Act
  Airline company Aerolineas Argentinas has pleaded guilty to failing to supply information requested by the NZCC under section 98 of the Commerce Act. It has been fined $11,000 in the Auckland District Court.
  Click here for more.

• NZCC publishes Regulatory Provisions of the Commerce Act 1986: Discussion Paper
  The NZCC has released a discussion paper on the regulatory provisions of the Commerce Act 1986. This discussion paper sets out the Commission's preliminary views on the new and significant changes to the regulatory provisions in the Act, which were introduced through the Commerce Amendment Act 2008.
  Click here for more.
  Click here to read Bell Gully commentary on the discussion paper

Mergers and acquisitions

• Statement of preliminary issues available for New Zealand Woolscourers application
  The NZCC has published a statement of preliminary issues relating to an application received by Auckland businessman David Ferrier/New Zealand Woolscourers Limited for a number of transactions affecting the wool scouring industry.
  Click here for more.

• Coca-Cola Amatil cleared to acquire Baker Halls brands from Old Fashioned Foods
  The NZCC has cleared Coca-Cola Amatil Limited to acquire the Baker Halls and Baker Halls Original brands, a hot-fill production line and other associated assets, from Old Fashioned Foods Ltd.
  Click here for more.

• Statement of preliminary issues available for Fletcher Building clearance application
  The NZCC has published a statement of preliminary issues relating to an application received from Fletcher Building Limited seeking clearance to acquire up to 100 percent of the assets of Stevenson Group Limited's Whangarei masonry business, and Stevenson's Auckland masonry business.
  Click here for the link to the press release on the statement of preliminary issues
  Click here for the link to the press release on the application

• Media Monitors apply for clearance to acquire Chong
  The NZCC has received an application from Media Monitors Pty Limited seeking clearance to acquire all the business and assets of Chong Bureau Limited.
  Click here for more.

• Reasons published for decline of Tegel's application for clearance to acquire Brinks
  The NZCC has published its reasons for declining to grant clearance for Tegel Foods Limited to acquire the assets and undertaking of the poultry businesses of P H Van den Brink Limited, VDB Industries Limited, Brinks South Island Limited, Southland VDB Limited, and BAT Promotions Limited, collectively known as Brinks.
  Click here for more.

Market behaviour

• NZCC - Fonterra did not breach Commerce Act
  The NZCC considers that Fonterra Co-operative Group Limited has not breached the Commerce Act by engaging in what it calls 'tactical pricing'.
  Click here for more.

• Schneider to pay $1.1 million for cartel activity targeting electricity sector
  Proceedings brought by the NZCC have resulted in the Auckland High Court imposing a $1,050,000 penalty on Schneider Electric SA after the company admitted participating in a price-fixing and bid-rigging cartel in the gas insulated switchgear industry. Schneider must also pay $50,000 in costs to the Commission.
  Click here for more.

Telecommunications

• NZCC commences review of backhaul
  The NZCC commenced a review of the links that provide access seekers using the unbundled copper local loop service with a backhaul link between the telephone exchange housing their equipment and their interconnect point.
  Click here for more.

• NZCC receives undertakings for the mobile termination access services
  The NZCC has received undertakings from Vodafone, Telecom and NZ Communications in relation to the provision of mobile termination access services.
  Click here for more.

• NZCC releases discussion paper as part of Next Generation Networks study
  The NZCC released a discussion paper which provides an overview of the drivers and implications of Next Generation Networks deployment internationally, and looks at the relevance of these in the New Zealand market.
  Click here for more.

• NZCC releases third report on broadband quality
  The third quarterly report on broadband quality has been released by the NZCC. Commissioned from broadband measurement consultancy Epitiro and ICT analysts IDC, the report examines the quality of broadband service provided by New Zealand's internet service providers.
  Click here for more.

• National roaming update
  On 5 September 2008, the Minister for Communications and Information Technology wrote asking the Commission to consider whether there were reasonable grounds to commence an investigation into whether regulation of national roaming should be extended to include price.
  Click here for more.

• Final TSO Determinations released by NZCC for 2007/08 TRS
  The NZCC has released its 2007/08 final determinations on the cost of the Telecommunications Relay Service (TRS) for the hearing impaired; and the proportion of cost to be met by each party liable to contribute to the cost of the TRS and the local residential telephone service obligation.
  Click here for more.

Consumer issues

• NZCC warns over hybrid comparative advertising
  A car company has been warned by the NZCC about comparative claims made in advertising for one of its hybrid vehicles.
  Click here for more.

• NZCC warns KLM over incorrect internet fares
  The NZCC has concluded its investigation into complaints received from consumers when KLM Royal Dutch Airlines declined to honour very cheap airfares booked via KLM's website. In the Commission's view, KLM is at risk of having breached the Fair Trading Act.
  Click here for more.

• Bird flu remedy is quackery
  A Tauranga-based couple specialising in homoeopathic remedies have pleaded guilty to 19 charges of breaching the Fair Trading Act for making misleading representations about their qualifications and their ability to provide cures or prevent diseases.They have been penalised a total of $23,400 by way of fines and costs awards in the Tauranga District Court.
  Click here for more.

• Company fined for 'energised' water claims
  Misleading customers by claiming a product was '100% Pure New Zealand Mineral Water' and making false scientific claims about the benefits of its supposedly 'energised mineral water', which was really just processed tap water, has cost an Auckland-based company after it was prosecuted by the NZCC.
  Click here for more.

Australian Competition and Consumer Commission (ACCC)

ACCC media releases

The ACCC has issued the following media releases:

Market behaviour

• ACCC institutes proceedings against Singapore Airlines Cargo Pte Ltd for alleged price-fixing
  As a result of its ongoing investigation into price fixing cartels in the air cargo industry, the ACCC has instituted proceedings in the Federal Court against Singapore Airlines Cargo Pte Ltd.
  Click here for more

• ACCC institutes proceedings against Telwater Pty Ltd
  The ACCC has instituted legal proceedings in the Federal Court in Brisbane against Telwater Pty Ltd, and one of its directors, Mr Paul Phelan, for allegedly engaging in resale price maintenance.
  Click here for more

• ACCC denies authorisation to Air New Zealand, Air Canada's Cooperation Agreement
  The ACCC has denied authorisation to Air New Zealand and Air Canada to give effect to a proposed Cooperation Agreement.
  Click here for more
  Click here for Air New Zealand's press release

Telecommunications

• ACCC issues telecommunications fixed services cost model for consultation
  The ACCC has commenced a public consultation on a model commissioned by the ACCC for regulated fixed network services through the release of a discussion paper and model documentation.
  Click here for more

• ACCC issues two reports under the Telstra accounting separation regime
  The ACCC has issued two reports under the enhanced accounting separation regime for Telstra.
  Click here for more

• Wholesale access to Telstra network still required – Tribunal
  The Australian Competition Tribunal has confirmed that there was an ongoing need for access to Telstra's network and that, in effect, the ACCC had proposed scaling back that regulation too soon.
  Click for more

Consumer issues

• ACCC institutes proceedings against Tel.Pacific Limited over pre-paid phone cards
  The ACCC has instituted legal proceedings in the Federal Court, Melbourne, against Tel.Pacific Limited for alleged contraventions of the Trade Practices Act 1974 in relation to the sale of its 'hello India', 'hello China', 'hello Middle East', 'UTSAV' and 'Voice Thailand' pre-paid phone cards.
  Click here for more

• Full Federal Court of Australia rejects ACCC's and Prouds' appeals regarding 'was/now' two-price advertising
  On 15 February 2008 Justice Moore found that some 'was/now' advertising published by Prouds in two 2006 catalogues was misleading and in breach of the Trade Practices Act 1974.
  Click here for more

• Court fines Ascot Four Pty Ltd, formerly Zamel's Pty Ltd, $380,000 for false advertising
  The Federal Court in Adelaide has fined Ascot Four Pty Ltd, the former owner of the jewellery retailer Zamel's, $380,000 after it was found guilty of making false and misleading representations about the price of 11 jewellery items advertised in its Christmas 2005 catalogue.
  Click here for more