Proposed changes to the Commerce Act to "lift the bar" on merger control and provide more certainty for competitor collaboration have now become clearer, with the introduction of the Commerce (Promoting Competition and Other Matters) Amendment Bill.
There is a lot to digest in the Bill (an early Christmas present for competition lawyers), which sets out a package of reforms intended to "modernise and strengthen New Zealand’s competition settings". There will be an opportunity for submissions to be made once the Bill is referred to select committee.
Some key initial highlights from the Bill are summarised below.
Merger control
As anticipated in our update Government announces changes to "lift the bar" on merger control, the changes include:
- New powers for the Commerce Commission to target non-notified mergers/acquisitions, including:
- the power to suspend an acquisition for up to 40 working days if necessary to protect competition while the Commission assesses whether it "has the potential" to breach the Commerce Act
- a "call-in" power to require parties to seek clearance if the Commission considers a transaction has the potential to breach the Act.
- Enabling the Commission to accept behavioural undertakings when giving clearance or authorisation (in addition to structural undertakings like divestments). The Bill does, however, place limits on this including that to accept a behavioural undertaking, the Commission must be satisfied that:
- a divestment undertaking would be insufficient or the behavioural undertaking is reasonably necessary to give effect to a divestment undertaking; and
- the undertaking is reasonably practicable for the Commission to monitor and enforce, having regard to the costs of doing so and whether the applicant will give an undertaking to pay costs relating to monitoring and enforcing compliance.
- Clarifying aspects of the competition test for mergers, targeted at clarifying that the substantial lessening of competition test captures 'killer acquisitions' of startups by dominant firms, and creeping acquisitions (involving a pattern of small acquisitions over a three year period).
- New timeframes: The Commerce Act currently provides for the Commission to make a decision on a clearance within 40 working days, but this is frequently extended. The changes propose a new statutory timeframe of up to 140 working days for clearance decisions and 160 days for authorisation decisions (though there are a number of carve outs proposed – including the ability for the Commission to extend if more time is needed because of the complexity of the acquisition).
Other changes
The Bill includes other changes outlined in our update: Upcoming changes to provide more certainty for competitor collaboration, and a new prohibition on predatory pricing that is directed at clarifying when below-cost pricing by a business with substantial market power will breach the Act.
Proposed changes include:
- Changes to the process for seeking clearance for competitor collaborations that are intended to streamline the process by removing the need for an assessment of the substantial lessening of competition test (but the core test for what is a collaborative activity will remain the same)
- A new notification regime (which will initially apply just to collective bargaining where the value of the goods/services will be $3m or less, and resale price maintenance). This will provide a streamlined process for parties to seek a form of authorisation for the conduct if it is in the public interest
- A new power for the Commission to grant class exemptions
- Limiting the application of the Official Information Act to confidential information provided to the Commission
- New prohibitions on retaliation against, or victimisation of, a person who makes a complaint to the Commission or provides information to the Commission.
Timing for the Bill to go through the Parliamentary process is not certain at this stage. However, the Bill proposes that a number of the provisions will not come into force until six months after the Bill is passed, so we expect many of the substantive changes will not be effective until late 2026 at the earliest.
If you have any questions about how the changes might impact your business or are interested in making a submission on the Bill, please contact a member of our competition law team.
