Clearance determination Eda Ranu & Water PNG

by Super User
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On 22 January 2020, the ICCC granted clearance to Water PNG to undertake a merger with Eda Ranu.

 Both water entities are state owned and are monopolies in their geographical markets by virtue of their respective legislations (Eda Ranu only operates in Port Moresby, while Water PNG operates in all other provinces).

Some key points to note about why the ICCC granted clearance to the parties:

  1. Current market structure for these types of entities was not economical for having more than one water supplier. There were high sunk costs and capital costs in order to maintain the infrastructures and provide the services.
  2. There already existed regulatory oversight on both entities through the regulatory contracts they had with the ICCC. As such, even though the merger would create a monopoly water entity in PNG, it was highly unlikely for the parties to raise prices to the detriment of consumers because the rates were set by the ICCC.