OECD kpcdb

1. Scope

 

Part 2 of the Act covers restrictive trade practices. Section 27 prohibits anti-competitive agreements, meaning contracts, arrangements or understandings that have the purpose, or have or are likely to have the effect, of substantially lessening competition in a market. 

 

The NZ Parliament has recently passed the Commerce (Cartels and Other Matters) Amendment Act which redefines NZ’s cartel prohibition. The cartel prohibition in section 30 of the Act relates to price fixing, limiting output and allocating markets. Cartels are prohibited per se. In addition, the Commerce (Cartels and Other Matters) Amendment Act revokes the joint venture exemption and replaces it with a collaborative activity exception. The Act also includes an exception for vertical supply contracts, and an exception for joint buying and promotion agreements.

 

Resale price maintenance (“RPM”) is prohibited under sections 37 and 38. It is a breach of the resale price maintenance provisions if a supplier of goods: specifies a price; and takes certain actions to enforce that specified price.

 

2. Assessment

 

To assess whether an anti-competitive agreement has or is likely to result in substantial lessening of competition, the Commission takes into consideration factors such as existing and remaining competition, potential competition and countervailing buyer power.

 

Cartels and RPM are illegal per se. 

 

Under the new cartel provisions, a party can obtain clearance for a collaborative activity when they can show the collaborative activity is not for the dominant purpose of lessening competition between two or more of the parties and the cartel provision is reasonably necessary for the purpose of the collaborative activity. 

 

In addition, under Part 5 of the Act, the Commission can also authorise an anti-competitive agreement where it is satisfied that the benefits to the public outweigh the harm of the agreement. A collaborative activity clearance or authorisation offers immunity from legal action under the Act.

 

The Commission has used its power to authorise a number of restrictive trade practices in the last five years.

 

3. Remedies and sanctions

 

Both remedies and sanctions may only be imposed by the Court. The Act only provides for civil sanctions (other than for failure to comply with a Commission request). 

 

See Section I.4 above for more detail.

 

Settlements are possible for anti-competitive agreements. 

 

From 1986 to 2015, there were approximately 45 decisions made by the Courts of New Zealand sanctioning illegal anti-competitive agreements.

 

4. Leniency

 

The Commission has a Cartel Leniency Policy that is available for cartels only (illegal agreements between competitors not to compete with each other, such as price fixing, restriction of output, the allocation of customers, suppliers or territories, and bid rigging). It does not cover other types of anti-competitive conduct such as resale price maintenance. The leniency programme is set out in the Cartel Leniency Policy and Process Guidelines.

 

The Cartel Leniency Policy offers individuals or businesses involved in a cartel the opportunity to be granted conditional immunity from Commission prosecution. Immunity is conditional as it depends on continuing co operation throughout the investigation.

The Commission will grant immunity to the first member of a cartel to approach the Commission, provided they meet the immunity requirements: a cartel member must provide enough information to show that the law may have been broken, identify who is involved, and explain how the cartel operated and affected New Zealand consumers. 

 

If the Commission is already aware of, or is investigating, the cartel, immunity may be granted to the first cartel member to apply who can meet the immunity requirements. This won't apply if the Commission already has sufficient evidence against the cartel member to take enforcement action.

 

Immunity protects a cartel member from legal action by the Commission, however, it does not prevent third parties from making claims for damages.

 

Where the applicant does not yet have sufficient evidence to qualify for the leniency programme, it may request a ‘marker’ to secure its position as the first applicant.

 

Even if full immunity is not available, the Commission may exercise its discretion by taking a lower level of enforcement action, or, in exceptional cases for individuals, no action at all, in exchange for information and full, continuing and complete co operation throughout a cartel investigation and any subsequent court proceedings.

 

Amnesty Plus: If a party to a cartel under investigation by the Commission who has not been granted conditional immunity informs the Commission of its participation in a separate cartel of which the Commission has no knowledge or where it does not yet have enough evidence to prosecute, may be eligible for Amnesty Plus. Amnesty Plus provides a conditional immunity in the separate cartel and a recommended additional reduction in penalty in respect of the cartel under investigation.