As 2020 draws to a close the New Zealand Commerce Commission (NZCC) is as busy as ever, with multiple merger applications and investigations on its books.

Upcoming legislative amendments, including the criminalisation of cartel conduct from April next year, suggest that 2021 will be just as busy. Below we briefly summarise the current “state of play” at the NZCC, as well as new developments expected in 2021.

NZCC - end of year round up

There is much to keep the NZCC occupied this December, with three clearance applications currently listed on the NZCC website. Of these, 2 have recently had Statements of Issues published, indicating that the NZCC has concerns about potential competition issues that may arise from the proposed mergers.

• On 30 October 2020 the NZCC published its Statement of Issues regarding Pact Group Holdings Limited’s application to acquire Flight Plastics Limited. The Statement of Issues states that the NZCC’s primary concern is the loss of competition between the parties. A decision is currently expected on 16 December 2020.

• On 30 November 2020 the NZCC published its Statement of Issues regarding NEP Broadcast Services New Zealand’s application to acquire the assets of Sky’s outside broadcasting business. The Statement of Issues states the NZCC has concerns about the horizontal effects from a loss of competition between the parties, as well as the vertical effects of a ten-year supply agreement that the parties will enter if the proposed acquisition completes. A decision is currently expected in February 2021.

The NZCC also has multiple investigations listed as “open” on its website, including:

• 3 non-notified merger investigations;

• 9 anti-competitive conduct investigations (including cartel investigations); and

• 7 consumer investigations - the NZCC recently announced it also has plans to investigate Safety Warehouse’s $100,000 “cash drop” event in Aotea Square under the Fair Trading Act.

In addition, the NZCC has stated that it received and granted 7 applications under the Cartel Leniency Policy in 2020 - 1 more than 2019, and 3 more than 2018.

Lastly, in the leadup to Christmas the NZCC is urging consumers to be cautious with toy and bike purchases over the holiday period, noting that four companies had recently received warning letters from the NZCC regarding product safety. The NZCC has completed 24 product safety prosecutions (including for products other than toys) since the start of 2017, with fines totalling more than $1.5 million.

Upcoming developments in 2021

Legislative amendments are expected to have a big impact in 2021, including importantly the criminalisation of cartel conduct from April 2021. This development is long-awaited in New Zealand, with cartel criminalisation originally proposed in 2011, dropped in 2015 and later re-introduced in 2019. The Commission has begun its educational rollout in the leadup to the criminalisation of cartel conduct in April 2021. It has released two new videos depicting instances of cartel conduct - bid rigging in the construction sector and market allocation in the real estate industry.

While the NZCC has yet to release guidelines on its approach to enforcing the new criminal offence, it is expected that the offence will only be used where the relevant conduct is considered to be “hardcore” cartel conduct. Some guidance from the type of conduct which may be captured can be taken from Australia - where a pharmaceutical company and its former export manager were recently each charged with 33 criminal cartel offences in relation to agreements to fix prices, restrict supply, allocate customers / geographic markets and rig bids regarding an ingredient used in stomach pain medications.

In terms of other developments expected in 2021:

• The Fair Trading Amendment Bill is expected to pass sometime in the next year - it is currently sitting with the Select Committee. If enacted, this Bill would introduce a prohibition on unconscionable conduct and extend the current unfair contract terms prohibitions to capture (some) B2B contracts.

• The NZCC’s market study into supermarkets will also be well underway by the beginning of 2021. The NZCC released its Preliminary Issues Paper (PIP) on 10 December 2020, which outlines some of the issues the NZCC will focus on and the proposed scope of its study. Broadly, the PIP states that the NZCC’s assessment will focus on factors affecting competition at different levels of the supply chain, as well as competitive outcomes in the grocery sector, such as prices, quality, and the margins of grocery retailers. Information-gathering will begin in earnest in January 2021.

• Indications are that a market study into building supplies will commence late 2021 once the final report of the supermarkets market study has been published.

• It is expected that a Bill proposing amendments to New Zealand’s prohibition on taking advantage of market power will be introduced in early 2021. The current prohibition has been difficult to apply in practice.

Get in touch

Please get in touch with any of the contacts listed on the right if you have any questions or would like to discuss any of the above.

Contributors elsie.stone@simpsongrierson.com