The Government’s recently announced review of the Commerce Act 1986 is the first time in 20 years that many of its provisions will be reviewed. This major review is intended to ensure that New Zealand’s competition settings remain fit for purpose. The discussion paper (available here) identifies specific matters the Government is considering which we summarise below.

The review will also consider submissions on any other Commerce Act issues not identified in the paper. This is a unique opportunity for businesses to raise any issues they may have with the operation of the Commerce Act in the knowledge that those issues will be carefully considered as part of a formal review. We are aware of many cases where uncertainty about the application of the Commerce Act (particularly in relation to the definition of cartel provisions and the cartel prohibition exceptions) has prevented businesses from engaging in conduct which would have been pro-competitive or otherwise beneficial.

Submissions on the discussion paper are due by 5pm, 7 February 2025. We will be making a submission highlighting the issues our clients have raised and would like to hear of other examples. Contact our expert team if you wish to discuss any aspect of the review or any particular experiences with the Commerce Act.

What are the specific issues the Government is consulting on?

Reform of New Zealand’s merger control regime

The Government is considering strengthening and clarifying New Zealand’s merger control settings by:

• Clarifying that the prohibition on anti-competitive mergers will apply to mergers which create, strengthen, or entrench a substantial degree of market power.
• Enabling the Commerce Commission to assess “creeping” or “serial” acquisitions by the same party of target firms that supply or acquire the same goods or services within the past three years.
• Clarifying when partial acquisitions are subject to the Commerce Act’s merger control provisions.
• Providing clarity on the definition of “assets of a business” for the purposes of the Commerce Act’s merger control provisions. 
• Allowing the Commerce Commission to accept behavioural undertakings, which are commitments by applicants to behave in a way that addresses competition concerns arising from a merger. Currently the Commission can only accept structural (divestment) undertakings.
• Conferring additional powers onto the Commerce Commission for non-notified mergers which allow it to:
  • Suspend completion or the implementation of mergers without needing to apply for an interim injunction.
  • Require parties to apply for clearance.
  • Require certain companies with substantial market power or which exceed a certain size to notify the Commission of any acquisitions.

While Australia has introduced reforms to transition to a mandatory and suspensory merger regime, the Government does not consider such a change is necessary in New Zealand as it considers the current voluntary notification regime is working well.

Amendments to the prohibitions on anti-competitive conduct

The Government is considering amendments to the Commerce Act to better facilitate beneficial collaboration between competitors, recognising that many of the issues facing the economy require novel and coordinated solutions (for example, transitioning to net zero). It is also considering introducing a prohibition on anti-competitive concerted practices (which already exists in Australia) which would capture co-ordinated conduct between competitors designed to avoid competition even if a court could not conclude that the parties involved had reached an understanding on certain matters. 

The introduction of Code or rule making powers and other matters

The Government is considering whether binding industry codes or rules could fill a gap in New Zealand’s competition regulation regime and whether the Commerce Act should be amended to allow for such codes/rules to be issued by way of secondary legislation. It is also considering changes to modernise court injunction powers to allow the Commission to seek orders requiring businesses to perform a certain act (instead of only stopping harmful conduct) and strengthening the protection of confidential information provided to the Commission, as the Government recognises that some businesses are reluctant to voluntarily provide commercially sensitive information to the Commission. There are also some minor and technical amendments to the Commerce Act which the Government considers could be addressed in the review and are listed at the end of the discussion paper.