Commerce Act reforms: The thinking behind the tinkering

Home Insights Commerce Act reforms: The thinking behind the tinkering

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Contributed by: Troy Pilkington and Hannah Loke

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Published on: August 25, 2017


In June, the Commerce and Consumer Affairs Minister Jacqui Dean announced that the Government was recommending changes to the Commerce Act – including:

  • providing the Commerce Commission with powers to undertake market studies; and
  • allowing Commerce Commission settlements to be registered as court enforceable undertakings – so that the Commission can litigate breaches of those undertakings without needing to prove that a breach of the Commerce Act has arisen.

At the same time, the Minister announced that any recommendations in relation to the s 36 market power regime would be pushed back to mid-2018, on the basis that consultation to date had not revealed that an alternative test would be beneficial to competition and consumers.

Yesterday the Cabinet papers and Regulatory Impact Statements (RISs) outlining the thinking behind those decisions were released. Interestingly:

  • in relation to potential s 36 market power reform, both MBIE and Cabinet agreed that it was difficult to identify any cases where the perceived problems with s 36 had led to actual harm – hence the decision to put that proposal on ice.
  • in relation to market studies powers, MBIE recommended that the Commerce Commission be given full market investigation powers, whereas Cabinet had "various concerns" with that option, including potential costs to businesses and unnecessary "fishing expeditions". Accordingly, Cabinet decided that the Commission should have a more constrained power whereby it can only conduct market studies at the initiation of the Minister.
  • in relation to the enforceable undertakings regime, both MBIE and Cabinet agreed that allowing the Commission to enter into court enforceable undertakings would be beneficial to enable negotiated settlements to be more readily enforced.

For further detail, the relevant Cabinet papers and RISs can be accessed here.

If you have any questions on how these developments may affect your business, please contact one of the contributors below. There will be further opportunities to submit on these proposed changes as the necessary enacting legislation works its way through Parliament.

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