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Cartels amendment bill now law

14 August 2017

Parliament has given a third reading to the Commerce (Cartels and Other Matters) Amendment Bill, most of which comes into force on receiving the Royal Assent.

The bill has had a relatively long legislative history, being introduced on 13 October 2011. It amends the Commerce Act 1986 and enhances the protections against anti-competitive behaviour. The range of prohibited conduct is expanded to include price fixing, restricting output, and allocating markets.

The bill targets the civil prohibition against cartels and has the objective ensuring that firms are not deterred from entering into legitimate, pro-competitive and efficient arrangements with other firms.

It does this through a number of new exemptions as well as a clearance mechanism, which enables parties contemplating collaborative conduct to test with the Commerce Commission whether the arrangement would raise concerns.

Information provided by the Ministry of Business, Innovation and Employment (MBIE) says that for many businesses, one of the key exemptions will be the collaborative activity exemption.

"The exemption is broad and looks to the substance of an arrangement not its form. It would cover arrangements like joint ventures, strategic alliances, syndicated loans and consortium bidding provided the arrangement has a legitimate purpose (ie, its dominant purpose is not anti-competitive) and the cartel provision is reasonably necessary to achieve that purpose.

"In assessing whether conduct is prohibited, the Commerce Commission and the courts are likely to look at business documentation such as emails, file notes, board documents and business agreements, as well as oral evidence from individual persons."

The Bill originally introduced a new criminal offence for cartels with sanctions of up to seven years imprisonment. In December 2015, the Government agreed to remove the criminal offence for cartels from the bill.

MBIE says it has been directed to monitor domestic and international developments to better assess the potential effects of cartel criminalisation and whether such an offence should be adopted in New Zealand.

The bill also introduces provisions to bring competition oversight of international shipping into the Commerce Act. These provisions will come into effect in two years.

Last updated on the 16th September 2019