The government and Commerce Commission have taken concrete steps to facilitate desirable collaboration between competitors in the face of COVID-19.
On 1 May 2020, the Commission issued guidelines on how it will assess certain competitor collaboration in light of COVID-19 (the COVID-19 Guidelines). Shortly afterwards, on 5 May 2020, a bill was introduced to Parliament that should enable the Commission to issue authorisations more quickly to businesses entering into arrangements that raise competition issues, but which nevertheless have a net public benefit overall (the Bill). The Bill proposed that this flexibility only applies during the “epidemic period" (being up until six months after the Epidemic Preparedness (COVID-19) Notice 2020 expires or is revoked). In our view, these changes are desirable quite apart from COVID-19 and should be a permanent change.
The COVID-19 Guidelines
The guidelines are welcome; they provide clarity on the process and speed with which the Commission will assess such collaboration, as well as some of the practical considerations that will be relevant in assessing compliance (e.g. the extent to which government departments have been involved and how to structure the arrangements to minimise their competitive impact).
However, a careful parsing of the COVID-19 Guidelines reveals there is no substantive change in the Commission's view as to what amounts to a legitimate collaborative activity on the one hand, and what breaches the Commerce Act on the other – which should not be surprising given the Act itself has not been amended. Accordingly, while the COVID-19 Guidelines are helpful from a process perspective, firms should not assume they provide any new substantive protection over and above the existing exemptions in the Commerce Act, which is what makes the authorisation changes in the Bill so important.
Changes to the Authorisation process
New Zealand's authorisation provisions sorely need the changes contemplated by the Bill. Setting aside COVID-19 related authorisations, the Australian Competition and Consumer Commission (ACCC) – which has the benefit of the streamlined process contemplated by the Bill – has issued nearly a dozen authorisations in 2020 alone. By contrast, the last authorisation issued by the Commission was back in late 2018 and it has considered only five in the past five years, no doubt a function of how involved the process has become in New Zealand (in large part due to the current Commerce Act provisions and Court of Appeal authority).
The difference is even more stark when the issues arising from COVID-19 are considered. The ACCC has been able to grant over 25 COVID-19 related interim authorisations this year, with some taking only a few days (rather than the usual months) to be decided. In New Zealand there have been none.
While no doubt some conduct which might have been authorised in Australia has been protected by the collaborative activities exemption in New Zealand, other initiatives which would have benefited New Zealand overall have simply not proceeded: it is one thing for stakeholders to demand co-operation in a crisis on the basis that 'It's a good thing for NZ Inc.' or 'This is not the sort of thing the Commission cares about', but it is individuals who ultimately have to make that call, knowing they are personally liable (irrespective of how 'technical' the breach might be).
The changes in the Bill should make the authorisation process a feasible option in many more cases, which is particularly important in a COVID-19 environment, but highly desirable regardless.
If you have any questions about the matters raised in this article, please get in touch with the contacts listed, or your usual Bell Gully adviser.
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This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.