Collaboration and Cartels Clarified – The Commerce (Cartels and Other Matters) Amendment Bill
The Commerce (Cartels and Other
Matters) Amendment Bill has finally passed following its introduction in
2011. It received royal assent on 14
amendments are designed to benefit
businesses and consumers by providing greater certainty for firms to
collaborate and compete.
of the amendments introduced by the Bill come into force immediately. However, there is a nine month transition period to
allow businesses time to check that existing arrangements do not breach the new
cartel prohibition. The changes will be will be enforced by the Commerce
Early drafts of the Bill imposed criminal sanctions for
cartel conduct. These provisions have
The Commission is developing non-binding guidelines which
will outline its proposed approach to the changes introduced by this Bill.
- Cartel provisions: price fixing, market
allocation, and output
restriction arrangements between competitors are defined as cartel provisions which are illegal
under the Commerce Act.
- Clearance regime: introduction of a clearance
regime through which the competition
implications of proposed arrangements,
which may include cartel provisions, can be tested. Clearance by the
Commerce Commission will provide certainty that the collaborative
activities exemption applies and the arrangements do not substantially
lessen competition in market.
- Shipping: the
international shipping exemption has been removed from the Commerce Act and a new regime
covering the international shipping industry introduced. This includes an
exception for “specified activities" relating to the provision of
coordinated international liner shipping services with a 2 year transition
- Enforcement powers: the High Court, on application
by the Commerce Commission, can make orders against NZ companies including
orders to cease trading or divest shares or assets where an overseas
acquisition of a controlling interest in that company is likely to
substantially lessen competition in a market
- New exceptions:
certain restrictions (for example
territory allocations in vertical supply contracts) and other genuine
collaborative activities fall outside the complete ban on cartel conduct. Most arrangements
with customers and suppliers, if properly structured, should fall within
the new exemptions.
- Maximum resale prices:
suppliers are expressly allowed to stipulate maximum resale prices.
For more information or advice on the implications of the
Bill, please contact Jeremy Carr or Nick Lovegrove.