Australian document and records management stalwart Objective Corporation is facing a investigation by New Zealand's regulatory over the company's acquisition of Feilding-based Master Business Systems.
New Zealand's Commerce Commission on Tuesday said it will probe whether or not he acquisition has hurt competition between the two companies, resulting in increased prices or lowering of quality of products and services supplied by the two.
Objective did not apply for prior regulatory clearance to buy MBS for NZ$5.4 million in November last year, a relatively small transaction in dollar terms, but the potential for the firm to corner a small but specialised market has clearly triggered a second pass.
Objective is being investigated under section 47 of the New Zealand Commerce Act, which prohibits acquisitions that are likely to substantially lessen competition.
A company found to have breached section 47 could be fined up to NZ$5 million.
Both Objective and MBS supply software to local councils for lodging and managing building consent applications with applications such as MBS/GoGet and Alpha One.
MBS is understood to have more than half of New Zealand local customers on its customer list.
In February Objective used its half yearly results to tell investors the company's merger and acquisitions activity had delivered results in the local government sector, with chief executive Tony Walls citing a "footprint of over 500 local government customers" as providing a "significant further growth opportunity".
Objective's moves to bolster its presence in councils both in Australia and New Zealand would also attract a "greater proportion" of research and development efforts Walls said in February.
Councils have been a rich seam for Australian tech companies, not least ASX compatriot Technology One, which like Objective has provided rock-solid returns to investors.
On its part, ASX-listed Objective acknowledged the Commission's investigation.
“Objective has been pro-actively assisting NZCC with their enquiries over recent months and will continue to engage constructively with NZCC to address the concerns which have been raised," Walls said on Tuesday.
Walls added that Objective has established a new Building Solutions Centre of Excellence in Palmerston North, with 75 employees, and is committed to its investment in world-class New Zealand innovation.