The Government has announced a second round of reforms to the Commerce Act 1986 (the Act) as part of its targeted review of New Zealand’s competition settings. The amendments are focussed on strengthening New Zealand’s merger regime, addressing concentrated markets and predatory pricing, and ensuring the Act can apply to anticompetitive conduct carried out using artificial intelligence (AI) or algorithmic tools. Importantly, the Government has not proposed introducing a mandatory merger notification regime, like that which was adopted in Australia. 

The proposals build on the first package of reforms announced in August 2025, in relation to collaborative activities and confidential information.

Key changes to New Zealand’s merger regime 

The announced amendments include: 

• Clarifying the substantial lessening of competition (SLC) test: The SLC test “as it is used throughout the Act” will be clarified to include creating, strengthening, or entrenching a substantial degree of market power in a market, similar to recent amendments to the Australian legal test. This change will also be carried through to the prohibition on anti-competitive arrangements and the misuse of market power prohibition which also use the SLC test. 

• Allowing the Commission to consider “serial” or “creeping” acquisitions: The Act will be amended to allow the Commission, when it is assessing the competitive impact of an acquisition, to combine the acquiring party’s relevant acquisitions in the previous three years. This change will also align the New Zealand legal test with recent Australian reform. 

• Clarifying the meaning of “substantial degree of influence” in the merger context: Currently, section 47 prohibits a person including interconnected or associated entities from acquiring assets or shares if the acquisition would have or would be likely to have, the effect of substantially lessening competition. An entity is associated if it can exert a substantial degree of influence, directly or indirectly, over the other. The Act will be amended to set out a non-exhaustive list of factors the Commission can consider in determining whether a person has a “substantial degree of influence” over the other.

• Clarifying the meaning of “assets of a business” in the merger context: The Act’s prohibition on anticompetitive acquisitions applies to the acquisition of shares or the “assets of a business” but does not include a specific definition of “assets of a business”. The Act will be amended to provide that “assets of a business” includes any kind of property, as well as a legal or equitable right that is not property. 

• Empowering the Commission to accept behavioural undertakings: The Commission will be granted the power to accept behavioural undertakings (in addition to ‘structural’ undertakings as is currently the case) as a condition for merger clearance or authorisation. This brings New Zealand into line with other jurisdictions (including Australia) which allow regulators to accept behavioural undertakings in the merger context. 

In addition, the Commission’s oversight powers will be enhanced by:

• Allowing the Commission to suspend the completion of transactions (“stay and hold” powers): The Commission will be able to temporarily suspend the completion of a potentially anti-competitive merger for a period of up to 40 working days while the Commission investigates the transaction. 

• Giving the Commission a “call in” power: The Commission will be able to “call in” a transaction it considers may SLC by issuing a notice to merging parties requiring them to apply for clearance within a certain period. The notice operates as a stay on the transaction until the clearance is decided, declined or the process is terminated. 

Additional statutory timeframes will also be introduced. The Commission will have a maximum of 100 additional working days (in addition to the current 40 working day timeframe) to decide complex mergers and must publish a decision summary for all merger decisions within one working day and full written reasons within 20 working days of its decision. 

While we welcome the Government’s decision not to adopt a mandatory merger notification regime, which would have imposed an unjustified compliance burden on businesses, the introduction of ‘stay and hold’ and ‘call in’ powers introduce new layers of regulatory uncertainty and potential delay that transaction parties will need to carefully consider.

Introducing changes to combat predatory pricing 

Predatory pricing is a strategy where a firm with substantial market power deliberately sets prices below cost with the intention to eliminate competition or prevent new entrants from gaining a foothold. The circumstances in which pricing may be predatory is the subject of significant economic debate; the proposed changes will introduce an objective economic test defining when prices charged by firms with substantial market power are presumed to be predatory:

• pricing below Average Variable Cost (AVC) or Average Avoidable Cost (AAC) over a sustained period is presumptively unlawful;

• pricing above AVC/AAC but below Long-Run Average Incremental Cost (the average cost of producing an additional unit of output over the long-term costs) or Average Total Cost (total costs divided by the number of units produced) over a sustained period is presumptively unlawful only where there is evidence of exclusionary intent; and 

• proof of recoupment is not required to establishing predatory pricing. 

Cabinet has also agreed that short-term promotional pricing, including one-off specials, de minimis discounts, or mistaken pricing would not be captured as predatory pricing unless they are a part of a sustained pattern of below-cost pricing behaviour. 

In our view, the introduction of multiple cost benchmarks and a tiered evidentiary framework could replace legal uncertainty with economic uncertainty. 

Addressing concentrated markets 

The Commission will be empowered to investigate whether pro-competition regulation is justified in a particular market or sector, including through requiring information from the relevant market participants. 

Digital conduct and AI 

The Act will be amended to ensure that existing prohibitions also apply to conduct carried out using AI or algorithmic tools on behalf of a person. While it is considered that AI-facilitated conduct may already fall within the scope of the Act, the amendment will confirm liability for such conduct, just as they are for actions undertaken by employees or agents. 

Recap on previously announced reforms

These latest reform announcements complement the reforms to the Act announced in August 2025. Those reforms include:

• Beneficial collaborations:

  • Introducing a statutory notification regime for collaborative conduct.

  • Providing the Commission with class exemption powers to exempt classes of collaborative conduct. 

  • Providing the Commission with the discretion to waive or reduce clearance and authorisation fees where it considers it appropriate to do so. 

  • Streamline the clearance process for legitimate collaborations, by allowing the Commission to only assess the application of the exception, without needing to also assess broader competition impacts. 

• Information handling: 

  • Providing a 10-year Official Information Act exemption for confidential information provided to the Commission. 

  • Extending the Commission’s ability to issue confidentiality orders over classes of information or documents with terms and conditions. 

  • Introducing anti-retaliation protections for persons providing information to the Commission. 

The Act will also be amended to enable the courts to issue performance injunctions requiring parties to remedy contraventions of the Act. 

What’s next? 

Cabinet has agreed to issue drafting instructions to give effect to these measures and the earlier package of reforms with the aim of introducing a bill into Parliament before Christmas for it be passed by mid-next year.  Given the tight turnaround, it is unlikely that a draft bill will be issued for public feedback and interested parties will likely have to wait until the Select Committee process to have their say on the proposed amendments. 

If you have any queries about what these proposed reforms would mean for you and your business, please contact one of our competition experts. 

This article was co-authored by Soomin Yang, a Solicitor from our Corporate team.