New Market Power Law Will Help Stamp Out Anti-competitive Behaviour

Commerce Commission issues guidelines to help businesses understand new market power test

The Commerce Commission today published its Misuse of market power guidelines, ahead of a law change that will make it easier to take action against businesses with market power whose conduct stifles competition.

Chair of the Commerce Commission, Dr John Small, says as a relatively small country Aotearoa New Zealand “can’t afford to have powerful players harming competition in key sectors of the economy”.

“These section 36 changes which take effect on 5 April impose particular obligations on firms that have substantial market power. From next week, the conduct of these firms can be assessed against its effect on competition. This will allow us to more successfully pursue conduct that is currently beyond our reach”.

“Robust competition and genuine market innovation deliver good outcomes for consumers. Ultimately, we hope these changes will stimulate greater competition by obliging the most powerful firms to have more regard to the competitive process”.

Dr Small says the changes, “will be good for consumers, the economy and New Zealand as a whole”.

He says the current market power test is complex, unwieldy, and focused on details that distract attention from what really matters – namely whether the conduct stifles competition.

“We’ve long been aware of the shortcomings of the current legislative provisions of the Commerce Act and welcome the changes which come into effect next week”.

The guidelines explain how the Commission will assess conduct under the amended section 36, including our approach to applying the ‘Substantial Lessening of Competition’ test to unilateral conduct.

Draft guidelines were issued for public consultation in October 2022. Dr Small says the Commission’s final guidelines are being issued ahead of changes to section 36 of the Commerce Act 1986, which come into effect on 5 April 2023, to give businesses clarity on how the Commission will analyse anti-competitive behaviour under the new law.

“They set out set out the basis on which the Commission will determine whether conduct by firms with substantial market power has the purpose, effect or likely effect of substantially lessening competition”.
 

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