Changes to Commerce Act will enhance competition

Proposed changes to the Commerce Act will promote better competition in New Zealand, Commerce and Consumer Affairs Minister Jacqui Dean says.

Following a review of the Act, the Government is recommending that the Commerce Commission be allowed to undertake market studies.

“These proposals would include empowering the Commerce Commission to undertake market studies and improve its enforcement actions without having to go to court,” Ms Dean says.

“This will allow the Government to be proactive, rather than reactive.

“It will mean Government can direct the Commission to examine markets where there are potential issues rather than just waiting for breaches of competition law to occur.

“A market studies power is often used by competition authorities around the world and introducing one here will bring New Zealand into line with similar jurisdictions.”

Other proposed changes to the Commerce Act include repealing the cease-and-desist regime, as well as allowing settlements to be registered as enforceable undertakings so any breaches can be quickly penalised by the courts.

“These changes will strengthen the ability of the Commission to enforce settlements without the expense and uncertainty of litigation. The cease-and desist-regime is cumbersome and has only been used once since it was introduced in 2001,” Ms Dean says.

The Government has also been considering changes to Section 36 of the Commerce Act, around misuse of market power.

“While the consultation process has demonstrated that Section 36 does not work perfectly for some types of conduct, it is not yet clear whether an alternative test would benefit competition or consumers. 

“Officials will continue to look into this and will report back in mid-2018 before decisions are made regarding section 36,” Ms Dean says.

A market study is detailed research by an institution into a particular market, or markets, where there are concerns that the market could be functioning sub-optimally. Market studies can be performed by the vast majority of competition authorities overseas.

The cease-and-desist regime was introduced to the Commerce Act in 2001. Cease-and-desist orders are an alternative to the Commerce Commission seeking interim injunctions from the High Court. They enable the Commission to ask dedicated ‘cease-and-desist’ commissioners to order firms to halt conduct suspected of breaching the Commerce Act.