The Commerce Commission seeks input on draft guidelines for the new market power prohibition

Yesterday, 18 October 2022, the Commerce Commission released draft guidelines explaining how it intends to assess conduct under the new section 36 market power prohibition that will come into force from April 2023. 

The new market power prohibition referred to in the Commission's draft guidelines will overhaul New Zealand's existing misuse of market power prohibition by replacing the "purpose-based" test with the Australian "purpose and effects-based" test. That change will mean it will no longer be sufficient for a business with market power to self-assess its conduct on the basis that:

(a) it would have done the same in a competitive market, and / or

(b) it does not have an anti-competitive purpose.

Rather, when making business decisions, a business with market power will need to ensure that it not only considers the purpose of its conduct, but also the potential effects on the market in question (including by forecasting how market dynamics may develop over time).

This law reform, and the way that the Commission interprets it, could have significant implications for the compliance frameworks for businesses that could be said to have market power.

To that end, it is important the Commission's guidelines provide clear guardrails for businesses to self-assess their conduct. The Commission is requesting feedback on its draft guidelines by 18 November 2022.

If you or your business would like to discuss the implications of these law changes, or the Commission's draft guidelines, please get in touch with one of our experts below.