September 17th, 2024
The Commerce Commission has released its Misuse of Market Power Guidelines ahead of a new law change that will make it easier to take action against businesses with market power whose conduct stifles competition. The changes will come into effect on 5 April 2023 and will impose particular obligations on firms that have substantial market power, the Commission said in a media release on 29 March.
According to the Chair of the Commerce Commission, Dr John Small, Aotearoa New Zealand “can’t afford to have powerful players harming competition in key sectors of the economy”. The guidelines explain how the Commission will assess conduct under the amended section 36, including its approach to applying the ‘Substantial Lessening of Competition’ test to unilateral conduct.
The current market power test is complex, unwieldy, and focused on details that distract attention from what really matters – whether the conduct stifles competition. With the new changes, the conduct of these firms can be assessed against its effect on competition, allowing the Commission to more successfully pursue conduct that is currently beyond its reach.
The Commission’s final guidelines are being issued to give businesses clarity on how the Commission will analyse anti-competitive behaviour under the new law. The guidelines set out the basis on which the Commission will determine whether conduct by firms with substantial market power has the purpose, effect or likely effect of substantially lessening competition.
Dr Small says the changes will be good for consumers, the economy, and New Zealand as a whole, as robust competition and genuine market innovation deliver good outcomes for consumers. Ultimately, the changes are expected to stimulate greater competition by obliging the most powerful firms to have more regard to the competitive process.
The Commerce Commission hopes that the new law changes will provide clarity to businesses and will be an essential tool in promoting competition in New Zealand’s economy.