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Competition Law Update

August 15, 2018

Contacts

Partners Anne Callinan, James Craig

Competition law (inc cartels)

In this FYI we look at some of the key recent developments in competition law including the announcement of a new anonymous platform for whistleblowers, key changes to the Commerce Act, and a hot-off-the-press update regarding the Commerce Commission’s priorities for 2018/19.

WhistleB

In addition to launching a sleek new-look website, the Commission has introduced an anonymous whistleblowing tool designed to encourage the detection of cartels by enabling people to report cartels without being identified.

The tool is to be delivered by WhistleB, a global provider of whistleblower enabling services that already offers its services to some of the world’s largest organisations in wide ranging industries. WhistleB states its system has been designed with optimal security in mind, using encryption methods to protect user anonymity and obtain the “highest possible data security and privacy settings”.

The whistleblowing service is not a substitute for a leniency application, and the Commission has confirmed that it will not accept leniency applications through the platform. Under the Commission’s leniency policy, parties that are involved in a cartel have the ability to seek immunity from enforcement action provided they are the first party to alert the Commission to a potential cartel. If a party is not the first to come forward, they may nonetheless “cooperate” with the investigation and may, in return, obtain the benefit of a reduced penalty recommendation from the Commission.

The Commission’s website contains more information here and a link to the whistleblowing service itself is here.

Progress on Commerce Act amendments

There are currently two Bills before Parliament which propose to further amend the Commerce Act, following its 2017 overhaul.

The Commerce (Criminalisation of Cartels) Amendment Bill, which proposes to criminalise cartel conduct, passed its first reading on 20 February 2018 and is now before a Select Committee. Hon Kris Faafoi has announced that he intends to have the Bill in force by April 2019. See our earlier update on this Bill here.

Separately, the Commerce Amendment Bill, which proposes to give the Commission the power to launch its own market studies (among other changes), passed its first reading on 1 May 2018 and is now before a Select Committee. Hon Kris Faafoi said he has asked to have the Bill fast-tracked with the aim of giving it legal force by the end of 2018. See our earlier update on this Bill here.

Commerce Commission priorities 2018/19

The Commission has also recently released an updated statement of its priorities for 2018/19, accessible here. In summary, the top items on the Commission’s agenda are:

  • Ongoing attention to cartel and anti-competitive conduct, especially “when it has the potential to have a significant impact on consumers and markets”.

  • Focus on addressing consumer harm in the following industries:

    • Retail telecommunications: a sector which the Commission says “has the potential to have a significant impact on a large number of consumers”. The Commission intends to continue to improve their understanding of the issues faced by consumers, engage with industry, carry out outreach to help consumers understand the services they are purchasing, and, where appropriate, undertake enforcement action. In addition the Commission also signalled its intent to implement the expected amendments to the consumer provisions of the Telecommunications Act.

    • Responsible lending: the Commission’s investigations, monitoring and outreach activities have indicated that there are still compliance issues among high-cost, short-term, online and mobile lenders. Non-compliance in this area will continue to be a key focus for the Commission due to the impact on “vulnerable consumers”.

    • Online retail: given the increasing use of online shopping on both domestic and overseas websites, the Commission states it “will carry out a range of work to increase [its] understanding of the issues associated with online purchasing”.

    • Motor vehicle sales: the Commission will be looking at “systemic issues consumers face when purchasing a car” – specifically, “misleading representations about the quality of motor vehicles, car dealers refusing to provide redress for serious motor vehicle faults, and dealers misrepresenting a consumer’s rights”.

    • Quality of service provided by electricity distributors: consultation will be carried out with stakeholders on revenue limits and quality standards that should apply to electricity distribution networks for five years from 1 April 2020. The Commission will also be “seeking to better understand why some distributors have previously failed to comply with the minimum standards for network reliability” and will be considering its “full range of enforcement options”.

    • Investigating non-notified mergers: the Commission notes that the success of New Zealand’s voluntary merger notification regime depends upon the credible threat of enforcement where there is a likely lessening of competition. There has been an apparent rise in non-notified mergers over the last two years, and the Commission has opened five investigations within the last 12 months. This is a continuing priority.

    • Improving its understanding: finally, the Commission indicates that, as a broad priority, it intends to “understand the operating environment for industries and consumers”, particularly in areas where there is emerging technology, along with the implications for consumers, competition and regulation generally.

If you have any questions about the impact of these changes, please feel free to contact one of the Simpson Grierson competition specialists in our team.

Contributors edward.warren@simpsongrierson.com, jesse.tizard@simpsongrierson.com