Commerce and Consumer Affairs Minister Kris Faafoi recently tabled a bill in Parliament that will enable the Commerce Commission to undertake market studies. This would empower the commission to conduct research into the structure and behaviour of markets and compel organisations and businesses to provide information.

Under the bill, market studies could be initiated by the minister or self-initiated by the commission. Faafoi's accompanying press release states that checks and balances will be in place to ensure market studies are used where there is a real need in the interest of consumers. These checks and balances mean that, among other things, the commission or minister will:

  • be able to initiate a market study only where it is considered to be in the public interest; and
  • need to publish the terms of reference for the market study in advance and recommend the date by which the final report will be published.

The ministry's associated regulatory impact statement outlines that the commission will be provided with "modest additional funding" to enable it to conduct these market studies. Presumably, this additional funding will be sufficient to avoid this new power causing resourcing issues and delays for the commission's other obligations and processes.

The bill also provides for other matters concerning the Commerce Act's competition law regime – namely:

  • repealing the act's cease and desist regime; and
  • empowering the Commerce Commission to accept enforceable undertakings in order to resolve restrictive trade practice enforcement cases under the act. This would enable the commission to litigate breaches of those undertakings without needing to prove that a breach of the Commerce Act has arisen. This power would not apply in relation to merger enforcement cases.

These changes reflect sensible changes to the Commerce Act given that:

  • the cease and desist regime has been used only once since it was introduced in 2001; and
  • it is useful for the commission to have more flexible enforcement tools.

Faafoi has asked officials to fast track the bill so that it will be operational by the end of 2018. The bill was set to have its first reading in early April 2018, before being referred to a select committee for consideration. There will be opportunity for consultation through the select committee process.

For further information on this topic please contact Sarah Keene or Troy Pilkington at Russell McVeagh by telephone (+64 9 367 8000) or email (sarah.keene@russellmcveagh.com or troy.pilkington@russellmcveagh.com). The Russell McVeagh website can be accessed at www.russellmcveagh.co.nz.

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