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Competition Alert – 10 August 2017

Home Insights Competition Alert – 10 August 2017

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Contributed by: Sarah Keene, Troy Pilkington and Hamish Saunders

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Published on: August 10, 2017

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Cartels Bill passes its third reading

The Commerce (Cartels and Other Matters) Amendment Bill ("Cartels Bill") passed its third reading in Parliament this afternoon and, therefore, is expected to be enacted into law very shortly (bills that have passed their third reading typically receive Royal assent within a week or so). Once passed into law, businesses will finally have the additional certainty of prohibitions better aligned with the equivalent Australian law, and an exemption better targeted to exempt efficiency-enhancing collaborations between competitors.  Given this law has been formulated and consulted on for a number of years, businesses are likely to regard this as a positive step – both to have a more "fit for purpose" exemption and (at last) legal certainty on the competition law regime going forward.

The Cartels Bill will make a number of fundamental changes to the Commerce Act 1986.  The two key changes are:  

  • the Cartels Bill expands the scope of the current price fixing prohibition to also specifically prohibit "market allocation" and "output restriction" arrangements between competitors.  The expanded prohibition will be known as the cartel prohibition; 
  • the Cartels Bill introduces new exemptions to the cartel prohibition – namely a new exemption for "collaborative activities" (to replace the existing joint venture exemption), and a new exemption for cartel provisions that are included in vertical supply contracts (where certain requirements are met).

The Cartels Bill also makes a number of other modifications to the Commerce Act, including:

  • introducing a new exemption for international liner shipping;
  • introducing an additional process for the Commerce Commission, and private litigants, to seek remedies in respect of business acquisitions by 'overseas persons'.

Most of the changes included in the Cartels Bill will come into force on the day after Royal assent (which as noted, should occur within the next week or so).  

The full text of the Cartels Bill can be accessed here.

If you have any questions on how the enactment of the Cartels Bill may affect your business, please contact one of the contributors below.

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