The Commerce Commission has opened an investigation into the acquisition of Master Business Systems (MBS) by ASX-listed Objective Corporation.
The commission will consider whether the acquisition would be likely to substantially lessen competition in any relevant market in breach of section 47 of the Commerce Act.
The investigation comes after Objective did not apply for clearance for the A$5.4 million acquisition which occurred on 29 November last year.
Sydney-based Objective and Feilding-based MBS were both suppliers of software used to lodge building consent applications and manage the building consent process.
MBS' systems were used by 52 per cent of local councils in New Zealand, 35 in total.
"The focus of the investigation will be on the extent of competition that is likely to have been lost between Objective and MBS as a result of the acquisition, and the extent to which the merged entity will likely be constrained from raising prices or lowering the quality of either its products or associated services," the commission said in a notice today.
Objective acknowledged the regulator's announcement in a note to shareholders today saying the commission had not yet reached a view about whether a breach of section 47 of the Commerce Act 1986 had occurred.
Objective's CEO, Tony Walls, said the company had been assisting the commission with its enquiries over recent months and would continue to engage to address the concerns raised.
The commission administers a voluntary notification regime that allows firms to apply for clearance if they consider their planned acquisition could raise competition issues.
If firms do not apply for clearance, the commission can initiate an investigation into a proposed or completed acquisition under section 47.
If a person breaches section 47 they may be subject to a penalty of up to $500,000 for an individual or $5 million for a firm.
Read more: Profits soar for Objective
"We have been delighted by the very strong support we have received from customers of both MBS/GoGet and Alpha One over this past year," Walls said.
"It is well appreciated by our customers across New Zealand that we are totally committed to our investment in world class New Zealand innovation, including the establishment of our new building solutions centre of excellence in Palmerston North, which now has more than 75 full time employees."
New solutions under the Objective Build brand will complement our existing products and will be progressively delivered to customers later this year, Walls added.
They will generate significant benefits for the New Zealand community through material innovations in lodgement and assessment of building consent applications and improved adherence with national building standards.
Master Business Systems' annual revenue represented less than 5 per cent of Objective’s total 2019 revenue, Objective said.