The final reading of the Commerce (International Co-operation, and Fees) Amendment Bill 2012 ("Bill"),1 once assented, will provide the New Zealand Commerce Commission ("NZCC") with the ability to team up with its international counterparts and exercise its powers for the benefit of overseas regulators such as the Australian Competition and Consumer Commission ("ACCC"), including exchanging with these regulators documents already held by the NZCC.
As discussed below, the Bill has significant implications for parties providing information to the NZCC, as well as parties who have provided information to the NZCC in the past.
The purpose of the Bill is to facilitate enhanced cooperation between the NZCC and overseas competition and consumer regulators2 to assist in what is increasingly becoming an international endeavour to uncover and prosecute multi-national cartel conduct. It reflects a similar law in Australia which was passed in 2007.
Similar amendments have been made to the Fair Trading Act 1986, Credit Contracts and Consumer Finance Act 2003, and Telecommunications Act 2001. Parties providing information to the NZCC should therefore be aware of any information that is provided to the NZCC under its compulsory powers, irrespective of the source, could fall into the hands of an overseas regulator.
The Bill provides for the New Zealand government, or the NZCC with the approval of the Minister of Commerce, to enter into "co-operation arrangements" with their overseas counterparts to allow for the exchange of information and investigative assistance between the NZCC and the relevant competition authority in the overseas jurisdiction. The requirement for a co-operation agreement ensures that there is reciprocity, such that the NZCC can also call on the overseas competition authority to assist in the Commission's own investigations.
Subject to certain rules and processes, the co-operation arrangements will allow the NZCC to provide compulsorily acquired information and/or investigative assistance to overseas regulators. The NZCC has already indicated that it will renew its existing co-operation arrangement with the ACCC to bring it in line with the Bill.3
When considering whether to enter into a co-operation arrangement, the Minister of Commerce must consider how the other jurisdiction uses compulsorily acquired information, the potential consequences for New Zealand consumers and businesses of providing such information, any privacy issues that might arise after consultation with the Privacy Commissioner, and New Zealand's international obligations.4 This process is intended to ensure that the provision of information is in New Zealand's best interests.
The co-operation agreement must also identify specifically the overseas regulator concerned, the foreign enactments caught by the agreement, and how any information provided under it will be used and securely stored. The agreement must then be published on the NZCC website.5
The Bill includes a number of safeguards on the provision of information and assistance by the NZCC when a request is made by an overseas regulator. These include:
- Establishing various criteria that the request for the information and/or assistance must meet, including that the information/assistance requested will be likely to assist the overseas regulator, is consistent with the co-operation arrangement and will not prejudice New Zealand's international trade interests or the NZCC's ability to perform its functions;
- Allowing the NZCC to impose conditions on such provision/assistance, including in relation to the confidentiality of the information, store and access, and the eventual disposal of information provided;
- Restricting the information that the NZCC can provide under a co-operation arrangement. The NZCC can only provide compulsorily acquired information that contains self-incriminatory statements where the overseas regulator provides a written undertaking that it will not use such statements in criminal proceedings or in proceedings against the person for a pecuniary penalty, and to the extent the overseas regulator can, that such statements will not be used by third parties in proceedings.6 In relation to communications that would be covered by the privilege for settlement negotiations and mediation the information must not be provided unless all parties claiming privilege in the document consent to its release.7 The NZCC also cannot provide information obtained under part 4 of the Commerce Act8 unless that information is already in the public domain;9 and
- As soon as practicable following the provision of information to an overseas regulator, the NZCC must notify both the original provider of that information and the person to whom the information relates.10 However, the NZCC need not notify those parties where it might compromise any investigation, or prejudice the maintenance of the law, or it is not practicable.11
The Bill also requires the NZCC to report in its annual report the number and general nature of requests that the NZCC has received from and made to overseas regulators.12
Implications for business
Despite the safeguards put in place, it will be difficult for the Commission to seek (or provide) absolute assurances regarding confidentiality and the appropriate use of the information once it is out of its possession and control. For example, overseas regulators may be subject to disclosure obligations that override its confidentiality obligations; this is the case with the NZCC itself, which is subject to the Official Information Act 1982 and in respect of any court prosecution, the court's interest in facilitating open justice. Uncertainty regarding the extent of compulsory disclosure is common to many overseas regulators.13 This uncertainty, combined with the increasing pressure for information to be disclosed to assist with third party damages claims, means that parties cannot assume that confidential information provided to the NZCC will remain confidential.
The NZCC is only required to notify concerned parties after the information has been provided, and even then notification can be withheld in some cases. This will give parties little opportunity to ensure that the Commission follows the appropriate processes or appropriately limits the information provided and the use of that information.
This a particular concern for those parties who provided information to the NZCC before the Bill came into force who would likely not have contemplated that the information they were providing might be subsequently shared with overseas regulators.
Finally, given that the Bill applies to information obtained compulsorily, it may result in an increased use by the NZCC of its information gathering powers under the Bill. At the same time, parties are likely to be a lot more circumspect in the information that is provided to the NZCC, in the knowledge that such information may be provided outside New Zealand. This is of course of particular concern in respect of the US where private plaintiff claims attract treble damages and often require minimal connection to the US to establish jurisdiction.