Question 1 (100% of marks)
You are the New Zealand Commerce Commission. An application for authorisation of a merger is in front of you.
Two electricity generators propose to merge. There will be a substantial lessening of competition. An archangel* has appeared to you in a dream and revealed that the value of the detriments caused by lessened competition has been accurately quantified at NZ$1 zillion.
There will also be benefits. The archangel* has told you that the value of improved quality and security of supply has been accurately costed at NZ$2 zillion.
However, a major industrial user of electricity (the archangel* says you may want to think of aluminium) is highly price-sensitive, and will immediately close when prices rise post-merger and it is unable to compete with cheaper imports. Its closure will also have immediate knock-on adverse effects on users of its output. The archangel* says that the detriments arising in the aluminium and aluminium-using sectors have been accurately costed at NZ$3 zillion.
There are no other relevant facts.
Do you authorise the merger?
Give your reasons. Write on one side of the paper. Stop writing when the bell goes.
* TRIGGER WARNING While 'archangel' is encountered in several major world religions, some examinees may find this spectral concept alarming. If so, (a) substitute any near-omniscient process or entity you are more comfortable with, and/or (b) report the matter to the college authorities, who will conduct a fair and full investigation and then harry the examiner out of academic life.