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Major Overhaul of New Zealand Competition Laws Announced

By  |  December 5, 2024
Major Overhaul of New Zealand Competition Laws Announced

New Zealand’s Commerce and Consumer Affairs Minister, Hon Andrew Bayly, in partnership with the Ministry of Business, Innovation, and Employment (MBIE), has unveiled a comprehensive review of the nation’s competition law regime. This initiative seeks to modernize regulations that have remained largely unchanged for over two decades and aims to bolster productivity, protect consumers, and ensure fair market practices.

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    Key Areas of Reform

    The review, described as the most extensive overhaul in 20 years, covers several critical aspects of competition law. According to a statement from MBIE, these include examining the governance of the Commerce Commission, revising merger control mechanisms, and modernizing anti-competitive conduct prohibitions. The reforms will also explore the introduction of industry-specific rules to address market failures effectively.

    Governance and Board Performance

    The government plans to evaluate the structure and effectiveness of the Commerce Commission to ensure it possesses the necessary expertise and governance framework for timely and impactful decision-making. Former Commission Chair Paula Rebstock will lead this aspect of the review. The goal, per Minister Bayly, is to create a “world-class competition and consumer regulator” capable of delivering tangible benefits for New Zealand.

    Merger Control Reforms

    A significant focus of the review is on refining New Zealand’s merger control regime. Potential reforms include addressing “creeping acquisitions,” which involve a series of smaller, incremental purchases that may collectively harm competition. The review is also considering changes to how partial acquisitions and asset purchases are assessed under competition law.

    Although New Zealand currently operates a voluntary notification system for mergers, the discussion document outlines potential amendments, such as introducing stay or hold-separate powers, call-in mechanisms for certain acquisitions, and targeted mandatory notification requirements for companies with substantial market power. However, the government has indicated that a shift to a fully mandatory merger regime is not being pursued at this stage.

    Anti-Competitive Conduct

    Proposed updates to the anti-competitive conduct regime include measures to clarify legal definitions and reduce barriers to beneficial collaborations. For instance, businesses may gain more explicit guidance on sustainability collaborations, which are often avoided due to fears of breaching existing laws. The introduction of a prohibition on “concerted practices,” similar to Australia’s regulations, is also under consideration to address tacit collusion in concentrated markets.

    Source: Rusell MC Veagh