As the year draws to a close, we share some highlights and changes that you might have missed as well as some of our insights on what 2024 will have in store for competition law in New Zealand.

In New Zealand’s first-ever criminal prosecution for cartel conduct, the New Zealand Commerce Commission (NZCC) has filed criminal charges against two construction companies and two directors for alleged bid rigging of publicly funded construction contracts. Andy Matthews comments:

The first New Zealand criminal cartel prosecution is a big deal. These proceedings will help clarify the role of criminal jurisdiction in the Commerce Act and are a timely reminder for people that any competitor interaction carries civil and criminal legal risk.

Matthews Law welcomes John Sibanda and Shaun MacLean Stones to the team. They are joining as Law Clerks and will assist the senior lawyers on competition and consumer law matters.

The recently announced proposed merger of Foodstuffs North Island and Foodstuffs South Island has gained much press. Some argue it will change little, given that the cooperatives work closely, have common branding, and have chosen (or agreed) to operate in separate geographic markets. The proposal has been promoted as leading to greater consolidation of efficiencies.

Andy Matthews had the pleasure of speaking at the Legalwise IP Licensing Fundamentals webinar on 9 November 2023, presenting on Competition Law Reforms in New Zealand & Australia: Changes, Issues & Options for IP lawyers.

A copy of the slides and paper accompanying Andy’s session can be found here:

Andy Matthews was delighted to attend the New Zealand Food and Grocery Council (NZFGC) 2023 annual conference in Sydney over 1-3 November 2023.

For those who haven’t seen our 2 page summary of the grocery supply code before, we’ve updated this below:

Andy Matthews really enjoyed being part of the 2023 36th IPSANZ annual conference as a speaker on The interplay between patent law and competition law with Cynthia Cochrane SC (Level 22 Chambers, Sydney), Kon Stellios (Special Counsel, Specialist Advice and Services Division, ACCC, Sydney), Linda Govenlock (Partner, Allens, Sydney), and with Natalie Shoolman (Principal, Wrays, Sydney) chairing the session.

On 1 September 2023 the New Zealand Government announced that the Grocery Supply Code (Code) will commence on 28 September 2023.

We’ve created a summary of supplier rights and retailer obligations in the Code, which you can download.

On 5 April 2023 the Commerce Amendment Act 2022 comes into full force. Significantly this means:

• New Zealand’s misuse of market power provision now uses an “effects test”. Persons with substantial market power (SMP) are prohibited from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition in the market they have SMP in, or any other market they directly or indirectly supply or acquire goods or services. The New Zealand Commerce Commission (NZCC) has published Misuse of Market Power Guidelines which set out how it intends to approach the new law. This is significant new “soft law”.
• Intellectual property (IP) exceptions in the Commerce Act are now repealed. IP rights will now be subject to the same competition tests as any other property right. There will however be a 1-year transitional period for existing agreements which had relied on the IP exception for agreements. The NZCC has published draft guidelines on the application of competition law to intellectual property rights.
• Cartel conduct now extends to land covenants, in addition to contracts, arrangements and understandings. There will however be a 1-year transitional period for covenants given before the commencement date.

10 things to know about the new law on misuse of (substantial) market power:

New Zealand competition law has had a busy year with record numbers of clearance applications, leniency applications, and market study reports.

We summarise below some competition highlights for 2022 and some insider intel on what we can look forward to for the new year.

Thank you all for your continued support.

The New Zealand Commerce Commission (NZCC) released its residential building supplies market study final report (Report) on 6 December 2022. The Report largely reinforces the findings and recommendations in the draft report with the benefit of further consultation and evidence.

Unchanged from the draft report, the Report’s key finding is that “competition for the supply of key building supplies is not working as well as it could if it was easier for building products to be introduced and for competing suppliers to expand their businesses”.

We are delighted to announce a series of exciting achievements for our staff.

• We are proud that Andrew (Andy) Matthews has been named as one of Who’s Who Legal “Thought Leaders – Competition 2023”. We also congratulate the other two named individuals – our friends and colleagues barrister Sarah Keene and economist James Mellsop.
• We welcome Charlie Matthews to the Matthews Law team and wish him the best in his exchange to National Cheng Kung University in Tainan, Taiwan.
• We congratulate Danny Xie on her promotion to Associate.

Finally we are excited that we will see many colleagues in person at the International Competition Network next week.  The New Zealand Commerce Commission (Te Komihana Tauhokohoko) hosts the 2022 ICN Cartel Workshop in Auckland, 5- 8 December 2022. Nau mai, haere mai ki Aotearoa (Welcome to New Zealand).

On 21 November 2022, Minister of Commerce and Consumer Affairs David Clark announced the introduction of the Grocery Industry Competition Bill 2022 (Bill) which is expected to have its first reading in Parliament soon.

The New Zealand Commerce Commission (NZCC) is consulting on new draft Misuse of Market Power Guidelines (Draft Guidelines). Submissions are due by 18 November 2022.

Purpose of and background to the Draft Guidelines

The Draft Guidelines explain how the NZCC proposes to assess conduct under the new test for misuse of market power which will come into effect on 5 April 2023. This is an opportunity to influence that approach.

Changes to the New Zealand Fair Trading Act 1986 (FTA) take force on 16 August 2022 which:

• Prohibit unconscionable conduct
• Extend the unfair contract terms regime to small trade contracts
• Entitle consumers to direct uninvited direct sellers to leave or not enter their property

These changes are aimed at reducing the prevalence of unfair commercial practices across the economy. The Commerce Commission has also published guidance about each of these changes.

The New Zealand Commerce Commission (NZCC) released its draft report on its residential building supplies market study (Draft Report) on 4 August 2022.

The NZCC’s preliminary view is that “competition for the supply and acquisition of key building supplies is not working as well as it could if it was easier for building products to be introduced and for competing suppliers to expand their businesses.” The Draft Report identifies two main factors for this: (1) the regulatory system and (2) quantity-forcing rebates.

New Zealand’s test for anticompetitive unilateral conduct will change from 5 April 2023. Persons with substantial market power will be prohibited from engaging in conduct that has the purpose, effect or likely effect of substantially lessening competition in a relevant market. The NZCC is expected to publish guidelines on the application of the new law.

In the meantime, we can look to Australia for guidance. Our new test follows earlier law reform in Australia which enacted the same change.

Competition law developments overseas can influence domestic thinking and trends. Two noteworthy recent international competition law developments are:

• The EC’s new vertical agreement exemptions and guidelines – What lessons can we take in applying NZ competition law to vertical agreements?
• The new chair of the ACCC’s speech on international collaboration of competition regulators – To what extent does the NZCC share the ACCC’s challenges and enforcement priorities?

The New Zealand Government has announced its full response to the New Zealand Commerce Commission’s (NZCC) market study into the retail grocery sector which found competition is not working well for consumers and supermarkets earn NZ$1M a day in excess profits. The Government has accepted 12 of the NZCC’s 14 recommendations – and the 2 recommendations it disagrees with is because the Government plans to go further including developing an additional mandatory wholesale grocery access regime as a backstop for the voluntary regime recommended by the NZCC.

On 1^st April 2022 Matthews Law celebrates its birthday and the start of its 10^th year in business as New Zealand’s leading specialist competition law firm.

Thank you to all our clients and colleagues for your continued support.

On 30 March 2022 the Commerce Amendment Bill (Bill) passed its third reading and should receive royal assent soon.

The Bill will:

• replace the test for misuse of market power
• extend the prohibition on cartel conduct to cartel provisions in covenants
• remove intellectual property exceptions
• empower the New Zealand Commerce Commission (NZCC) to grant interim authorisations for restrictive trade practices
• increase maximum pecuniary penalties for breach of merger control laws
• expand the NZCC’s (domestic) information sharing powers

On 8 March 2022 the New Zealand Commerce Commission (NZCC) released its final report on its study on competition in the retail grocery sector. The final report is the product of over a year of work after the NZCC was directed to look at factors affecting competition in the retail grocery sector on 17 November 2020.

Andy Matthews has been interviewed on the upcoming grocery market study report to be released on 8 March 2022 for Stuff article: “Omicron won’t get supermarkets off the hook with ComCom, advocates predict”.

Andy Matthews has been interviewed on the Commission’s proceedings filed against Objective Corporation Limited for acquiring Master Business Systems Limited for New Zealand Herald article: “Why Aussie software firm faces penalty after taking over Kiwi rival”.

It’s been another dynamic year for New Zealand competition law, with the collaborative activity clearance and restrictive trade practices (RTP) provisional authorisation mechanisms introduced in recent years starting to see use and other proposals for change still on the horizon. Market studies have also seen a lot of activity, as has the Commission Commission’s (NZCC’s) case register.

On the consumer law side, the Fair Trading Amendment Act was enacted and the Government decided to implement a new legislative framework for a New Zealand consumer data right.

On 3 September 2021 the District Court dismissed 45 charges the New Zealand Commerce Commission (NZCC) filed against Bunnings Limited (Bunnings) for alleged breach of the Fair Trading Act 1986 (FTA).

The Fair Trading Amendment Bill (Bill) had its third reading yesterday (10 August 2021) and should receive royal assent soon.  The Bill was introduced on 17 December 2019. (Changes proposed earlier are summarised here.)

[Update (at 19 August 2021): The Bill received royal asset on 16 August 2021. The main changes will come into effect on 16 August 2022 (to give businesses a year to review their practices and standard form small trade contracts and be ready to comply), but some provisions were effective from 17 August 2021. The Commerce Commission has usefully summarised this here.]

The Bill is one of many recent, current and potential competition law reforms by the government. They remind us that more changes could be implemented relatively quickly.

Part of New Zealand’s new fuel regulatory regime comes into effect tomorrow, 11 August 2021. The regime implements the Commerce Commission’s (NZCC’s) recommendations from its 2019 competition study into the retail fuel sector.

On 29 July 2021 the New Zealand Commerce Commission (NZCC) released its draft report on its competition study into retail grocery. New Zealand has two major grocery retailers. The NZCC began the study in November 2020 following a Government directive to investigate competitive conditions.

Background

Last year, the NZ Government consulted the public on the options to establish a consumer data right (CDR) in NZ. (Our newsletter on the CDR consultation is here.) In this digital, data-driven world it is common for businesses to collect data from their transactions with consumers. (They can even end up with more data on a consumer than the consumer themselves!) A CDR will require certain businesses to share that data when requested to by the consumer. For example if someone wants to move banks, their old bank would be required to share necessary details with the new bank in a prescribed, secure manner and environment. The aim of a CDR is to ultimately enhance consumers’ welfare by reducing search and switch costs, facilitating competition and encouraging innovation.

Matthews Law is pleased to announce that Andy Matthews has again been selected for inclusion in the 13th Edition of The Best Lawyers in New Zealand for his work in both Competition & Consumer Law and Regulatory Practice.

The Commerce (Criminalisation of Cartels) Amendment Act comes into force in New Zealand today. This means that:

• It is a now a criminal offence under the Commerce Act to enter into or give effect to a cartel provision while intending to engage in “price fixing”, “restricting output” or “market allocating”.
  • Cartel law is designed to prevent business rivals from colluding and agreeing not to compete with each other, for example agreeing not to undercut one another’s prices.
  • The cartel prohibition is drafted broadly and so all agreements between potential competitors should be carefully considered.

We are delighted to step into our 9^th year. We are also proud to announce that Genelle Seah was promoted to Associate on 26 February 2021.

2020: Competition & consumer laws box on in the face of pandemic

Competition

Price fixing…

– comes in all shapes and sizes, and does not discriminate!

• The Supreme Court ruled in favour of the Commerce Commission (Commission) in the first defended price fixing case in a decade. Ultimately Lodge was ordered to pay $2.1M and Monarch $1.9M in pecuniary penalties. This brings the final total of pecuniary penalties for all the Trade Me real estate cartels to just shy of $23M – the second largest in New Zealand history.

– comes with a hefty price tag, even for individuals!

• The High Court imposed a $344K pecuniary penalty on Prices Pharmacy 2011 and a $50K pecuniary penalty on its director after they admitted to engaging in price fixing resulting in consumers paying $6, instead of $5, for their prescription items.

The new Privacy Act 2020 (Act) came into force on 1 December 2020, replacing the 27 year old Privacy Act 1993. The new Act is intended to be more fit for the digital age where new technologies, such as social media platforms, e-commerce, and cloud storage, have transformed the way personal information is used. Many of the reforms attempt to better align New Zealand privacy law with the GDPR.

The Minister of Commerce and Consumer affairs has released a discussion document on options for establishing a consumer data right in New Zealand. Submissions are being sought to help determine whether New Zealand needs a consumer data right, and how any such consumer data right should be designed.

The New Zealand Government has announced its decision to make further major changes to NZ’s competition (antitrust) law. Assuming it is re-elected in September’s General Election, the Government anticipates introducing a Bill in early 2021 that would:

• replace the test for abuse of market power;
• remove IP exceptions;
• increase pecuniary penalties for breach of merger control laws (making them consistent with the penalties for anticompetitive conduct);
• expand the Commerce Commission’s (domestic) information sharing powers; and
• increase the number of Commissioners from 6 to 8.

In its 2 April 2020 judgment, the Supreme Court ruled that an arrangement between Hamilton real estate agencies to adopt a vendor-funded model for listing properties on Trade Me (a major property listing website) and to remove existing listings from Trade Me in January 2014 had the effect of controlling the price of real estate services they supplied in competition with each other, amounting to price fixing in breach of the Commerce Act 1986 (Act).

The issue of “price gouging” is very topical – not just in New Zealand, but globally – as governments are effectively forced to reduce the competitive playing field in response to COVID-19.

The New Zealand Government is acutely aware of the risk that essential businesses (eg supermarkets) might seek to take advantage of these unusual trading conditions. In an attempt to combat that risk, the Government has established a “whistle-blower” email address (pricewatch@mbie.govt.nz) for people to report allegations of price gouging. That email address attracted almost 1,000 complaints in its first couple of days and, if media reports are to be believed, it would appear there is a common sentiment among New Zealanders that they are feeling “ripped off”.

But complaints aside, is “price gouging” illegal in New Zealand, or is it just morally wrong?

Andy Matthews and Gus Stewart have been selected by their peers for inclusion in the 12th Edition of The Best Lawyers in New Zealand for their work in:

• Competition and Consumer Law (Andy & Gus); and
• Regulatory Practice (Andy).

Andy has been recognised by Best Lawyers® for his work in Competition and Consumer Law since 2014, and for Regulatory Practice since 2016. But this marks the first time Gus enters the list. The full list can be found here.

On 1^st April 2020 Matthews Law started its 8^th year in business as New Zealand’s leading specialist competition law firm.

In February the New Zealand Government announced its response to the Commerce Commission’s (Commission) 2019 Retail Fuel Market Study. The study was the first competition study under the new Commission powers so the Government response has been eagerly anticipated.

The Commission made 11 recommendations. The Government:

• agreed with 6 recommendations, which will be implemented by new legislation and regulations, including the Fuel Market Bill currently in draft and an enforceable industry code of conduct;
• acknowledged 4 recommendations, which have been passed on to the parties involved for responses; and
• will consider 1 recommendation further, which may require further policy work.

On 17 December 2019, the Fair Trading Amendment Bill (Bill) was introduced, and on 12 February 2020 passed its first reading. The New Zealand Parliament is now inviting the public to make submissions on the Bill by 27 March 2020 [Update: Submissions now due 26 April 2020].

Matthews Law is delighted to announce the arrival of two new staff members:

• Genelle Seah as a solicitor, advising on competition, regulatory, trade practices and consumer protection law
• Danny Xie as a law clerk, assisting the senior lawyers and researching on competition and trade issues

Genelle previously worked as a solicitor with Martelli McKegg and completed an internship with Rajah & Tann Singapore LLP.

Danny is currently studying a Law and Commerce conjoint degree at the University of Auckland and is interested in commercial law including finance, economics and competition law.

About us

Matthews Law is a specialist competition law firm. We are internationally recognised market-leaders in competition law (antitrust), economic regulation and consumer law. We are also noted experts in TMT and aviation matters.

We are involved in significant matters in our area, covering a range of contentious and non-contentious matters, from merger control, to cartels and investigations, to technology issues, to advertising. We work in most economic sectors and are constantly learning about new industries and issues. Our work is interesting and often high profile. Much is for international clients.

We take pride in being innovative, commercial, solution-focussed advisers, while remaining technically excellent. We are busy and looking for the right people at various levels.

Matthews Law and its lawyers have again been ranked as leaders in competition/antitrust in the Chambers Asia-Pacific 2020 Guide. The firm has maintained its ranking as a “Band 2” firm (since 2019), with Principal Andrew Matthews retaining his “Band 1” position (which he has held since 2006) and Special Counsel Gus Stewart being elevated to “Up and Coming”.

Matthews Law is pleased to announce that Andy Matthews has again been selected for inclusion in the 11th Edition of The Best Lawyers in New Zealand for his work in both Competition & Consumer Law and Regulatory Practice.

2018 saw continued law change and Commerce Commission (Commission) activity. This included:

• Competition studies – Commission got new powers to conduct ‘competition studies’.
• The Court of Appeal overturned the High Court decision in the Hamilton Real Estate price fixing appeal – confirming that even agreeing a component of “price” with competitors is price fixing.
• The Court of Appeal upheld the Commission’s decision to decline authorisation of the NZME/Fairfax merger. The Court confirmed that the merger would likely substantially lessen competition in advertising and reader markets in NZ, which would not be outweighed by public benefits.
• May 2018 marked the end of the transitional period for the new civil cartel law – all arrangements with actual/potential competitors must now be compliant.