The Commerce Commission has a new power to carry out competition (or 'market') studies, following the enactment of the Commerce Amendment Act 2018 in late October.
It is widely anticipated that the first market study will be a study into fuel markets and that supermarkets could also be a target. Based on overseas experience, other potential target industries include electricity, dairy, communications, digital platforms, new car retailing, and banking (although the funding allocated to the Commission to undertake the new function means that only one study may be able to be carried out at a time).
Key features of the new market study process are:
While a market study is not the same as an investigation into a potential breach of the law, the Commission's ability to use its compulsory information gathering powers and the potential outcomes of a study mean that similar skills and resources will need to be applied by businesses involved in a market study. For example:
- Effective engagement in a market study process will require an understanding of the Commission's powers and processes, and resources to participate in Commission consultation
- Commission requests for information will need to be assessed for validity and reasonableness
- In collating material to respond to a Commission request, material will need to be reviewed for relevance, competition/consumer law risk, and confidentiality issues. The potential compliance burden is highlighted by a recent study into retail electricity pricing in Australia, in which the Australian competition regulator reportedly issued over 110 notices to 45 businesses and received over 48,000 documents in response.