The Government has introduced the Commerce (Promoting Competition and Other Matters) Amendment Bill ("Bill"). The Bill aims to amend the Commerce Act to modernise and strengthen competition settings in New Zealand.
The reforms signify some of the most significant changes to the Commerce Act in decades. They carry strong implications for M&A activity, price competition, and collaboration with competitors. Some are positive reforms to enhance the efficiency and transparency of the Commission's processes. However, a number appear to risk adverse or unintended consequences, and a number appear to be "solutions" seeking to address problems that do not exist in practice. It is hoped that "the wheat can be separated from the chaff" during the consultation process.
We expect the Bill to have its first reading and be referred to Select Committee before Christmas, with submissions being called for early in the new year.
Key reforms previously identified
As we discussed in our previous alert the Government, to further its goal of Going for Growth, announced wide ranging Commerce Act reforms on 16 September 2025. Key reforms in the Bill include:
- A new definition of a substantial lessening of competition which includes conduct "creating, strengthening or entrenching a substantial degree of power in the market." Different to Australia, which passed a similar amendment but only in relation business acquisitions, the amended New Zealand definition would also apply to all prohibitions in the Commerce Act that use the substantial lessening of competition standard, including the misuse of market power and anti-competitive contracts prohibitions. This risks being overly-broad and chilling competitive conduct.
- Empowering the Commission to assess the competitive effects of all of a party's acquisitions over a three-year period (referred to as "creeping acquisitions"). This mirrors a recent amendment made to the merger test in Australia, but there is not a clear evidential basis that this reform is required in New Zealand.
- Empowering the Commission to accept "behavioural undertakings in some circumstances" when considering clearances or authorisations for business acquisitions. In the Bill's current drafting, the Commission would only be able to accept behavioural undertakings where a divestment undertaking is "insufficient."
- Strengthening the Commission's ability to address non-notified acquisitions, by introducing a "stand-still" power (i.e. to suspend acquisitions for up to 40 working days) and a "call-in" power (i.e. a power to require parties to seek clearance for an acquisition).
- Introducing a maximum statutory time period for the Commission to reach a clearance or authorisation decision, extendable in 20 working day increments by agreement in complex cases. A statutory ability for the Commission to "stop the clock" is also being introduced. The combination of these amendments means in practice it is unlikely there will be any material difference to the Commission's current review timelines.
- Introducing objective cost-based tests for when conduct is predatory pricing in breach of the misuse of market power prohibition, including pricing below "Average Variable Cost" or "Average Avoidable Cost", or pricing below "Long-run Average Incremental Cost" or "Average Total Cost" where there is an exclusionary purpose. Where either test is met, it will be deemed a breach of the misuse of market power prohibition. We expect this will be difficult to apply in practice, and risks businesses being reticent to offer discounts or lower prices (which would not be for the long-term benefit of New Zealand consumers).
- Introducing a power for the Commission to carry out a study in relation to any market, industry or sector, and recommend to the Minister the development of pro-competition regulation (such as to remove or reduce barriers to entry to, and expansion in, a market). This would be in addition to the existing power for the Commission to conduct market studies.
- Introducing new (hopefully more efficient) processes for the Commission to approve certain conduct, including:
- a new streamlined clearance process for beneficial collaboration;
- a notification regime for small business collective bargaining and resale price maintenance (allowing for these to progress unless the Commission objects); and
- a new power for the Commission to grant class exemptions.
Surprises in the Bill
The Bill contains several reforms that were not previously agreed as recorded in publicly available Cabinet Minutes, and does not implement others that were agreed:
- The Bill repeals the existing exception for acquisitions from the trade practices (cartel) prohibitions. We do not consider that the ramifications of this proposal have been fully considered. Without the current exception, every business acquisition of a competitor would risk being viewed as a "cartel" (as the acquisition of a competitor removes that competitor from the market). We expect this will be tidied up during the submission process.
- The Bill makes no mention of algorithms or artificial intelligence, despite Cabinet previously agreeing that the Bill would clarify that the existing prohibitions (including for cartel conduct) apply to actions carried out by algorithms of artificial intelligence.
Next Steps
If you have any questions about how these reforms may impact your business or wish to discuss the possibility of submitting on the Bill, please contact one of the authors.
As set out above, we expect the Bill to have its first reading and be referred to Select Committee before Christmas, with submissions being called for early in the new year.