Govt targets anti-competitive behaviour

Commerce and Consumer Affairs Minister Kris Faafoi has today announced the start of public consultation on measures to strengthen the law protecting consumers and small business from anti-competitive behaviour by powerful firms.

“New Zealand has a high proportion of markets that are dominated by powerful firms, so it’s important we have effective laws that prevent them from misusing their power,” Mr Faafoi says.

“Section 36 of the Commerce Act is intended to prevent businesses from using their market power to suppress competition. However, as currently drafted, section 36 has tilted the playing field in favour of powerful firms and distorted competition.

“The law is difficult to enforce, and is not currently capturing a wide enough range of anti-competitive conduct.

“For example, when a powerful supplier asks a retailer not to stock a competitor’s products, this conduct can harm competition. It decreases choice and potentially increases prices for the consumer, and prevents other businesses from participating in the market. Under the current law, the firm would unlikely to be breaching Section 36.”

 Mr Faafoi says that the weakness of Section 36 was known to the previous Government two years ago.

“Nothing was done to protect consumers and honest business. But this Government will act to ensure New Zealand business can compete on a level playing field, and to create an effective competition law for the long-term benefit of consumers. Having healthy, competitive markets benefits everyone.”

The proposed changes to Section 36 will also bring New Zealand’s law in line with Australia and other developed economies. Mr Faafoi says the review is part of broader work by the Government to help honest business thrive and protect consumers.

“In December last year, I released a discussion paper on options to protect individual businesses from unfair commercial practices. While the Commerce Act focuses on competition as a whole, not individual competitors, these measures will complement each other as we move to make New Zealand fairer for business and consumers.”

Further information on the proposed changes and how to make a submission is available here. Consultation is open until 1 April.