Government announces proposed changes to the Commerce Act

Tuesday 27 June 2017

Authors: Torrin Crowther, Jenny Stevens, Glenn Shewan and Michael Tilley

​​​​​​​The Minister of Commerce and Consumer Affairs, Hon Jacqui Dean, has today announced changes to the Commerce Act.

The Government is recommending that:

  • the Commerce Commission (Commission) be given market studies powers
  • the 'cease-and-desist regime' be repealed
  • settlements are able to be registered as court-enforceable undertakings

Potential changes to the misuse of market power regime have been deferred yet again, with ​officials to report back in mid-2018. This is in stark contrast to Australia, where controversial changes have progressed.

Introduction of a market study regime

The most significant amendment announced today is the introduction of a market study regime. A market study is detailed research by an institution into a particular market, or markets, where there are concerns that the market could be functioning sub-optimally.

MBIE provided further detail this afternoon, confirming that the power will only be exercisable at the direction of the Minister (where, for instance, the Minister believes it is in the public interest), with the scope and timeframe of an inquiry to be established on a case-by-case basis.

Significantly for businesses, the Commission will be able to make use of information gathering powers and there is the potential for enquiries to be wide-ranging and lengthy.

Changes to the Commerce Act (Act) will be required. Businesses, particularly those in high profile, concentrated markets, may well wish to take an active role in this process to ensure the regime is fit for purpose. The overseas experience suggests such studies can be very time consuming and costly for market participants.

Repealing the cease-and-desist regime

The cease-and-desist regime was introduced as an alternative to the Commission seeking interim injunctions from the High Court. The regime empowers dedicated 'cease-and-desist' commissioners to order firms to halt conduct suspected of breaching the Act. However the regime has only been used once since its introduction, and the Government has acknowledged that it is cumbersome and, seemingly, surplus to requirements.

Introducing an enforceable undertakings regime​

The Government is also proposing that settlements reached between the Commission and parties under investigation be subject to enforcement by the courts. Such undertakings, known as enforceable undertakings, are common in other jurisdictions such as Australia and the US, and would give the Commission greater power to compel compliance with settlement agreements.​

If you would like to talk to us further about the proposed changes, please contact one of our team.​


Disclaimer

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.

For more information
  • Torrin Crowther

    Partner Auckland
  • Jenny Stevens

    Partner Wellington
  • Glenn Shewan

    Senior Associate Auckland
  • Michael Tilley

    Senior Solicitor Auckland
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