Conclusion
10.172 In this Chapter, the Commission considered the extent of competition in the supply of airfield services at Christchurch International Airport. It found that the relevant market was one in which CIAL was by far the major supplier, faced little prospect of new competitors entering the market, and was not sufficiently constrained by the countervailing power of the airlines, and hence was one where competition was limited. The Commission applied its generic principles developed earlier in this report to calculate the appropriate asset base and WACC for CIAL. It then considered the returns that CIAL had made in the recent past, and the returns it was projected to make in future years, against target returns for those years based on realised or forecast demand and other costs. It also assessed the efficiency implications of control.
10.173 A critical assumption made by the Commission is that the costs of control would be borne by acquirers rather than the general public. After having netted-off all of the costs of control from the benefits to acquirers, the Commission has not found any net benefit to acquirers. Indeed, even the gross benefits are small.
10.174 The Commission has not found evidence that CIAL earned excess returns historically, and there are potentially only small forecast excess returns. The thresholds contained in section 52 of the Commerce Act are not satisfied in the case of the airfield activities supplied by CIAL to acquirers. The Commission, therefore, considers that on the balance of probabilities it is not necessary or desirable for the airfield activities supplied by CIAL to be controlled in the interests of acquirers.
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