Anti-cartel legislation now passed but criminal sanctions gone

The Commerce (Cartels and Other Matters) Amendment Bill is now passed, almost six years after its introduction. Most of the amendments come into force immediately.

The provisions which would have imposed criminal sanctions for cartel conduct have been dropped.

Key provisions

  • Recasting the price fixing prohibition: the Bill specifies that price fixing, market allocation, and restricting output are cartel provisions and as such are collusive behaviour and therefore illegal under the Commerce Act.
  • New exceptions for desirable commerce: restrictions like territory allocations in vertical supply contracts and genuine collaborative activities fall outside the complete ban on cartel conduct.
  • Collaborative activity clearance regime: in addition to the collaborative activity exception, a clearance process is available through which businesses can test the competition implications of their proposed joint venture activity.
  • Jurisdiction amendments: the legislation clarifies how the Commerce Act applies to activity undertaken outside New Zealand.
  • Overseas acquisitions affecting New Zealand: the Commerce Commission has the power to seek a High Court declaration that an off-shore merger has or is likely to lessen competition in a New Zealand market. This will make it easier for the Commission to tackle international deals which threaten New Zealand consumers.
  • Exemption for maximum resale prices: suppliers are expressly allowed to stipulate maximum resale prices – a sensible move which recognises that, unlike minimum resale prices, they are pro-competitive and do not stifle price competition amongst resellers.

International shipping: halfway house exception

The international shipping exemption has been removed from the Commerce Act, despite very strong opposition from the industry.

A late change, however, provides an exception for “specified activities" relating to the provision of coordinated international liner shipping services. Such activities include:

  • coordinating schedules and determining port calls
  • exchanging, selling, hiring, or leasing space on a ship, and
  • pooling ships to operate a shipping network.

A two year transition period is provided.

What next?

The Commission is developing competitor collaboration guidelines which will outline its proposed approach to the cartel prohibition, exemptions (including the new collaborative activity exemption), and the clearance regime for cartel provisions relating to collaborative activities. 

We expect these to be finalised in the near future. While they will not bind the Commission or the courts, they provide some direction as to how the Commission will assess the amendments to the Commerce Act.

Our thanks to Harriet Hansen for writing this Brief Counsel.

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Related topics: Cartels; Competition law reform; Competition, regulatory & antitrust

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