Schedule 8 would establish the types of notifiable conduct in the statutory notification regime. Section 65H would empower the Governor-General by Order in Council, to add or amend types of notifiable conduct in Schedule 8 on the recommendation of a Minister.

Section 65H(2) would establish what the Minister must be satisfied with before making a recommendation to add a type of conduct. Subsection (2)(b) specifies that the type of conduct would be predictable, that is, well understood and with consistent outcomes of enforcement or authorisation. Under subsection (2)(c)(ii), the type of conduct would be likely, in typical market conditions, to have public benefits that outweigh the expected detriments of the conduct.

We consider that section 65H(2) should be tightened to clarify what types of notifiable conduct could be added by Order in Council. Specifically, we recommend amending subsection (2)(b) so that the criterion focuses on the likely effects of the type of conduct, rather than the conduct itself. We also recommend amending subsection (2)(c) so that the focus is on the conduct not being likely to substantially lessen competition in a market or being likely to yield public benefits that outweigh the expected detriments.

We propose similar tightening in section 65H(2)(d), which relates to the Commission’s ability under section 65M to issue a “no-objection” notice about conduct. We recommend amending subsection (2)(d) so that, rather than referring to “administrative efficiency”, the criterion focuses on whether the Commission can assess the likely effects of the relevant type of conduct within the time frame in section 65M(2).

Proposed section 65Q sets out the circumstances in which the Commission could rescind a no-objection notice. Under subsection (1), it could do so after giving 45 working days’ notice to the person that notified the conduct.

We understand that Australia operates a similar regime, but with a notice period of 30 days. To align with Australia, we recommend that section 65Q(1) be amended to change the notice period before the rescission takes effect to 30 working days.

Further, to support the regime’s certainty and efficiency, we recommend inserting subsections (3) and (4) to require the Commission, before it may rescind a no-objection notice, to ensure that:

• the person that notified the conduct, and any other person likely to have an interest in the rescission, has had a reasonable opportunity to make submissions to the Commission

• the Commission has had regard to those submissions

• the rescission notice includes the Commission’s reasons for rescinding the no-objection.

We also recommend inserting section 65Q(5), to clarify that the “protected period” referred to in section 65O would end when a no-objection was rescinded, but the rescission would not affect anything that was done while the no-objection was in force.

Clause 22 of the bill as introduced would also insert section 65R. The policy intent is that section 65R would enable the Commission to grant class exemptions to exempt certain conduct from any provisions in Part 2 (Restrictive trade practices) and Part 3 (Business acquisitions) of the Act.

Class exemptions could cover conduct that is either unlikely to substantially lessen competition or is likely to result in public benefits that outweigh the detriments to the public. Exemptions would be time-limited, may include limitations or conditions, and would be secondary legislation.

Applying the class exemption power to Part 3 would empower the Commission to create targeted class exemptions for smaller mergers that are unlikely to cause competitive harm but might technically contravene the Act.

We note that, in the bill as introduced, Part 3 is not mentioned in section 65R(4). The New Zealand Law Society suggested that section 65R be amended to clarify that class exemptions cover both Parts 2 and 3 of the Act. We agree that this clarification is necessary for consistency and recommend that section 65R(4) be amended accordingly.

Clause 2 of Schedule 8, inserted by clause 59 of the bill, would establish types of conduct, and the thresholds that would apply for the conduct to be notifiable. The types of conduct would initially be limited to collective bargaining with a monetary threshold and resale price maintenance. We were advised by officials that the regime would allow contractors such as Fired Up Stilettos to participate in collective bargaining.

Clause 2 would limit collective bargaining to instances where parties reasonably expect that the results of collective bargaining (such as the value of goods or services supplied or acquired, understandings, or arrangements) would total no more than $3 million over a 12-month period. To improve clarity, we recommend amending clause 2 of Schedule 8 to clarify that the $3 million threshold would apply to each individual participant, rather than being a combined threshold across all participants.

Clause 40 would amend section 91 of the Act (Appeals in relation to determinations by Commission). Under clause 40 as introduced, the Commission’s decisions under the statutory notification regime would be subject to a right of appeal to the High Court, limited to errors of law. The Commission would not be able to challenge the High Court’s decision other where it believes the Court has made mistakes in legal interpretation or application.

We note that clause 40 appears to empower appeals to the High Court in respect of decisions by the Commission to make class exemptions. This does not align with the bill’s policy intent.

Therefore, we recommend amending clause 40(1) and (2) to clarify that, under section 91 of the Act, persons could appeal to the High Court on questions of law under these proposed sections:

• 65K (Commission may object)

• 65M (Commission may issue no-objection notice or otherwise not object)

• 65O(1)(a) (Length of protected period)

• 65P (Conditions relating to no-objection notices)

• 65Q (Commission may rescind no-objections).

Clause 26 would insert section 68A. Section 68A would enable the Commission to suspend certain time frames established by the Act while waiting for information from third parties that would determine a clearance or authorisation.

We consider that section 68A should apply when the acquisition is being considered by an overseas regulator or the Commission is waiting for information from an applicant, or from third parties, and only where the information is relevant to the Commission’s assessment. To preserve the integrity of statutory time frames and benefit applicants, we recommend amending the bill accordingly by replacing proposed section 68A(1). This would include replacing paragraph 68A(1)(b), which would require the Commission to be satisfied that the information, or the consideration by an overseas regulator, is material to its determination.

Clause 5 of the bill as introduced would amend section 3 of the Act to update the merger control regime. Section 3 defines some terms that relate to competition. Clause 5(1) would insert section 3(2A) into the Act to clarify that the phrase “substantially lessening competition in a market” may include “creating, strengthening, or entrenching a substantial degree of power in the market”.

The policy intent of this clause is to enable the Commerce Commission (for example) to scrutinise and, where warranted, prevent acquisitions where an incumbent acquires a nascent or innovative rival to slow the rival’s product development. Some submitters argued that the clarification is unnecessary because current case law and the substantial lessening of competition (SLC) test already capture the concerns of proposed section 3(2A). We consider that applying the clarification across the Commerce Act may create uncertainty about legitimate competitive responses, because such conduct could be framed as “strengthening” or “entrenching” a firm’s position.

Therefore, we recommend limiting the clarification in proposed clause 3(2A), “creating, strengthening, or entrenching a substantial degree of market power”, to the merger regime only, that is, to existing sections 47, 47A, 66, and 67 of the Act. These sections deal with business acquisitions, and clearances and authorisations for business acquisitions that are given or granted by the Commission.

Clause 5(2) would insert section 3(8)–(10) to provide that the Commission’s assessment of a merger may consider any other acquisition by any party to the current acquisition of assets or shares in the relevant period. Clause 5(2) is intended to address “creeping acquisitions”, where a firm makes a series of small acquisitions that cumulatively decrease competition over time.

Proposed section 3(8) would clarify when the combined effects of such acquisitions can be considered for the purposes of sections 47 and 47A in Part 3 of the Act (Business acquisitions). These sections provide for the prohibition of some business acquisitions, and declarations relating to acquisitions by overseas persons. Section 3(8) would also clarify the position, for the purposes of sections 66 and 67 in Part 5 of the Act (Authorisations and clearances). Sections 66 and 67 enable the Commerce Commission to give clearances and grant authorisations for business acquisitions.

Proposed section 3(8)(b) as introduced would refer to a “relevant period”, to be counted when considering the combined effects of any other acquisition of assets and shares by any other party to the current acquisition. Section 3(9) would provide that for section (8), in the case of a clearance or authorisation application under section 66 or 67, a “relevant period” means the period starting three years before the registration date of the clearance or authorisation notice, and ending on the notice’s registration date.

Some submitters argued that there is no evidence that serial acquisitions are escaping scrutiny by the Commerce Commission. They state that the three-year “lookback” would create uncertainty and chill activity relating to mergers and acquisitions. Several submitters said that the proposal is broader than the Australian model.

We consider that the risk of creeping acquisitions could be better targeted, while reducing compliance costs and legal uncertainty. We recommend inserting new subparagraphs (i) and (ii) in section 3(8)(b) to limit the lookback to prior acquisitions that occur in the relevant period and involve the same, substitutable, or otherwise competitive goods or services. This would align the New Zealand provisions more closely with Australia’s.

Clauses 23 and 24 of the bill as introduced would amend sections 66 and 67 of the Act by providing more prescriptive timeframes for the Commission’s decisions on applications for clearances and authorisations. They would also provide statutory tests for when time frames may be extended or suspended. Clause 25 would amend section 68 to provide a timeframe for giving written reasons.

Some submitters recommended that extensions of time be based on the complexity of the analysis required, rather than on the complexity of the acquisition. We agree. We recommend amending clauses 23 and 24 accordingly.

Clause 8 of the bill as introduced would repeal section 46 of the Act (Saving in respect of business acquisition). Section 46 is one of a number of provisions that provide for exceptions to the application of Part 2 of the Act (Restrictive trade practices). It draws a bright-line boundary by providing that acquisitions of assets of a business or shares are dealt with through the merger regime in Part 3 (Business acquisitions) rather than also being able to be challenged under Part 2.

The proposed repeal of section 46 is based on the premise that the provision is no longer needed, given the bill’s related changes to the merger’s provisions and the existing safeguard in section 83 of the Act (Pecuniary penalties relating to business acquisitions) against double civil pecuniary penalties.

A number of submitters argued that repeal of section 46 would expose ordinary merger activity to Part 2 scrutiny, chilling legitimate commercial activity. We recognise that submitters value a clear and statutory boundary. We therefore recommend deleting clause 8 of the bill, to retain section 46.

Clause 27 of the bill as introduced would replace existing sections 69A(1) and (2). New section 69A(1)(b) would enable the Commission, when giving a clearance or granting an authorisation, to accept commitments (“behavioural undertakings”) from a person who proposes to acquire assets of a business or shares, about how they would behave after a merger, including that they would take or refrain from taking an action specified in the undertaking.

New section 69A(2) would establish conditions that the Commission must be satisfied with before it accepts a behavioural undertaking from the firm to either act, or refrain from acting. These include that the Commission be satisfied that selling off assets or shares (a structural remedy) is insufficient. Several submitters argued that the provisions contained in subsections (2)(a) and (b) create an unrealistic hurdle, because structural divestment is almost always theoretically possible, even if commercially unviable or disproportionate.

We agree. We therefore recommend removing proposed section 69A(2)(a) that would require the Commission to be satisfied that, without the undertaking, it was unlikely to be able to grant an authorisation or clearance.

Further, we recommend replacing proposed section 69A(2)(b)(i) to require that the Commission be satisfied that addressing the effects of the acquisition by way of a structural undertaking would cause costs out of all proportion to those effects, or is otherwise not reasonably practicable.

Clause 28 of the bill as introduced would amend existing section 69AB (Authorisation or clearance void if undertaking contravened). New section 69AB(1A) would establish circumstances in which there has not been a contravention. One of these, set out in subsection (1A)(b), is that the person has notified the Commission as soon as they became aware of the breach.

The New Zealand Law Society argues that requiring a person to notify the Commission “as soon as” they become aware of a breach is too strict. We agree. We recommend replacing that standard in section 69AB(1A)(b) with a deadline of 5 working days that would be triggered by awareness of the material facts of the failure to comply.

Clause 32 as introduced would insert section 82F into Part 6 of the Act (Enforcement, remedies, and appeals). This would empower the High Court to issue a corrective action order for contravention of Part 2 (Restrictive trade practices). Section 82F(1) would enable this to happen on the application of the Commerce Commission.

Some submitters argued that private parties can already enforce Part 2 and should be able to seek corrective action orders. We agree. We recommend amending section 82F(1) so that both the Commission and private parties may apply to the court for corrective action orders under section 82F.

We note that section 88(1) of the Act provides that the court may at any time rescind or vary an injunction made under Part 6. We therefore recommend inserting section 82F(5) to provide that the court may at any time rescind or vary an order made under section 82F.

The Commerce Commission supports the powers provided for in new section 82F. Because corrective action orders are available only after a breach is established, the Commission also supports expanding existing court powers, so the court could restrain both threatened or ongoing conduct, and where appropriate, compel affirmative steps.

We consider that a provision making it explicit that the court may grant injunctions, including requiring a person to take specific action for contravention of Part 2, would reduce uncertainty and potential litigation. We therefore recommend inserting new clause 31A to replace existing section 81 (Injunctions may be granted by court for contravention of Part 2) with new sections 81 and 81A.

Our proposed new section 81 would enable the court to grant an injunction that restrains a person from acting or requires a person to do an act or thing. This would be on the application of the Commission or any other person and under certain conditions. New section 81A provides for when a court could grant performance injunctions for contravention of Part 2.

Clause 52 of the bill as introduced would replace existing section 100 (Powers of Commission to prohibit disclosure of information, documents, and evidence). New section 100 would enable the Commerce Commission, during an investigation, inquiry, or merger assessment, to make a time-limited confidentiality order prohibiting the disclosure of specific information related to the matter. Clause 53 would insert section 100AA, which would create a statutory protection for confidential information supplied to the Commission.

Section 100(3) as introduced provides that the confidentiality order would not have any effect from 10 years after the Commission’s final determination on an application or notice, or since the conclusion of the investigation or inquiry. While the order is in force, the information covered would not be subject to release under the Official Information Act 1982.

The Office of the Ombudsman cautioned that the combined effect of proposed section 100 and the separate confidentiality framework in proposed section 100AA could unjustifiably restrict access to information. The New Zealand Law Society suggested that orders made under section 100 should be limited to a minimum period.

We agree. We recommend that section 100(3) be amended to limit the period for which section 100 orders could remain in force to 5 years after the conclusion of the Commission’s related investigation or inquiry.

Proposed section 100AA as introduced would set the default protection period for confidential information provided to the Commission at 10 years. In defined circumstances, the Commission could extend protection, but not beyond the date by which records must be transferred to Archives New Zealand under the Public Records Act 2005.

The Office of the Ombudsman opposed this provision, questioning whether the 10-year prohibition, with potential extensions, struck the right balance. The New Zealand Law Society recommended removing or narrowing the provision. We agree and recommend amending proposed section 100AA(4) and (5) to limit the initial confidentiality period to 5 years, with further extensions permitted only in increments of no more than 5 years at a time.

The New Zealand Law Society favoured further restrictions. It proposed requiring the Commission to demonstrate a link between the reasons for the confidentiality order and the duration, and confining the order to relevant information that genuinely needs confidentiality. It also proposed that an order be made only after considering factors such as open justice, trust, and public accountability.

We accept that the Commission’s decision-making in this matter needs clearer boundaries, and recommend the insertion of section 100(3A). It would apply to any confidentiality order that would extend beyond the date of an application’s final determination or the conclusion of the investigation or inquiry. It would require the Commission, before making such an order , to consider whether the order’s duration is appropriate, having regard to the risk of harm and the principles of transparency, accountability, and public trust.

Clause 12 of the bill as introduced would insert section 51F (Commission may carry out study of pro-competition regulation) into Part 3A of the Act (Competition studies). New section 51F would empower the Commission to conduct market studies in any market, industry, or sector, and to recommend pro-competition regulation. Proposed section 51F(2) would enable the Commission to require market participants to prepare and provide forecasts and forward plans for these studies.

Some submitters opposed the proposed new study power, arguing that the Commission’s existing market study powers under Part 3A make it unnecessary. We agree that the existing Part 3A framework gives the Commission the necessary powers to gather information and make recommendations, while embedding clearer process safeguards than the proposed section 51F.

Some submitters opposed enabling the Commission to compel parties to create new information, such as forecasts, describing it as overly intrusive and inconsistent with established disclosure principles. We are also concerned that this proposed information-gathering power may not be justified.

We consider that the Commission’s current information-gathering powers under Part 3A, supported by section 98 (Commission may require a person to supply information or documents or give evidence) are sufficient to enable it to analyse markets and develop recommendations. We therefore recommend removing the proposed pro-regulation study power by deleting clauses 11, 12, and 55 from the bill.

We further recommend inserting new clause 11, to amend existing section 51B (Preparation of competition report). New subsection (3A) would expressly allow the Commission to recommend the development of pro-competition regulation, and to recommend reforms to reduce regulatory barriers to competition.

Clause 13 (which would insert section 53ZF) and proposed Schedule 4 relate to material incorporated by reference into secondary legislation. These provisions would allow the maker of the secondary legislation to give legal effect, by a notice in the Gazette, to amended or replacement material of the same general character, and to remove the legal effect of expired or revoked material.

Schedule 4 would replace section 223 of the Telecommunications Act 2001 with proposed section 223 (Material incorporated by reference). We note that the proposed amendments to the Telecommunications Act are substantially similar to changes proposed in the Telecommunications Amendment Bill, which is currently before the House. We therefore recommend that these amendments be removed from Schedule 4.

Clause 58 of the bill as introduced would repeal Schedule 5 of the Commerce Act, which defines materials incorporated by reference and provides for matters such as access and amendments to such materials. In the absence of Schedule 5, section 223 of the Telecommunications Act would have no effect. We therefore recommend amending Schedule 4 of the bill to repeal section 223 of the Telecommunications Act 2001.

Labour and Greens urged the Government to push forward with this bill at first reading because New Zealanders are paying the price for weak competition in essentials like groceries, banking, insurance, and energy.

The bill as introduced contained a number of important and constructive reforms. The best thing about it is the new powers to tackle creeping acquisitions and private equity roll-ups, particularly the conduct that entrenches market power over time.

However, the bill has been weakened during the select committee process.

Predatory pricing prohibitions are a standard feature of competition law in comparable jurisdictions. They exist to prevent dominant firms from temporarily pricing below cost in order to eliminate competitors, before later raising prices once market power is secured. The proposed use of long run average cost as an objective benchmark was consistent with established international competition practice and would have been a small step forward.

Labour and Greens would have supported sector-specific industry codes. The omission reduces the bill’s ability to deliver meaningful change in markets where consumers are currently being failed.

Labour and Greens are also disappointed that the committee did not progress amendments to section 97B that would have provided contractors initiating collective bargaining with a safe harbour from retaliatory conduct by contractees, despite concerns raised during submissions that without such protections the right to collectively bargain may exist in theory but not in practice.

Labour and Greens urge the Government to hold its nerve. New Zealanders facing high grocery bills, banking costs, energy prices, and insurance costs need a competition regime prepared to confront excessive market power directly. While this bill contains worthwhile reforms, in its amended form it falls well short of the ambition signalled by Government ministers to tackle the structural competition problems facing the New Zealand economy.