The Government has introduced the long-anticipated Commerce (Promoting Competition and Other Matters) Amendment Bill to Parliament, a move which signals one of the most significant reforms to the Commerce Act in recent years. The Bill aims to implement the package of reforms announced by the Government earlier this year (see our previous alert) and could have significant implications for businesses operating in New Zealand. It is expected that stakeholders will have the opportunity to have their say on the proposals when the Bill reaches the Select Committee.

What are some of the key changes? 

The Bill introduces several amendments intended to streamline Commerce Act processes and reduce uncertainty. In particular, it:

• Introduces a statutory notification regime allowing businesses to proceed with certain categories of conduct that are likely to be in the public interest or are unlikely to substantially lessen competition after notifying the Commerce Commission, unless the Commission objects. This will initially be limited to resale price maintenance and small business collective bargaining and is intended to provide a faster, cost-effective alternative to seeking authorisation. 

• Establishes a streamlined collaborative activity clearance process: Currently, the Commission can only grant a clearance for a collaborative activity if it is satisfied that the collaboration meets the requirements of the collaborative activity exception and would not have the effect or likely effect of substantially lessening competition in a market. Under this new process (introduced as an additional option rather than replacing the existing one), the Commission will be able to grant a clearance if the collaboration meets the requirements of the collaborative activity exception, without needing to assess its competitive effects. This change is expected to simplify and speed up the clearance process, although the statutory timeframes for the Commission to make a decision remain unchanged. 

• Allows the Commission to accept behavioural undertakings as part of giving an authorisation or clearance for acquisitions. Currently, the Commission can only accept ‘structural’ undertakings to dispose of assets or shares, which has been a significant limitation on the Commission’s powers. The change will go some way towards aligning New Zealand with Australia (and other jurisdictions), but under the current Bill there will remain limitations on the Commission’s ability to accept behavioural undertakings, including the Commission must be satisfied that either a structural undertaking is insufficient, or the undertaking is reasonably necessary to give effect to a structural undertaking. These statutory limitations do not appear in the Australian equivalent, however, historically, the ACCC has shown a preference for structural undertakings over behavioural undertakings. 

• Empowers the Commission to grant class exemptions to proactively exempt classes of persons or transactions from compliance with the Commerce Act prohibitions – both the anti-competitive conduct and anti-competitive acquisition prohibitions. The practical impact of this change will depend on how actively the Commission chooses to exercise its powers.

• Clarified what constitutes a substantial degree of influence: The Bill introduces specific factors relevant to determining whether a person is able to exert a substantial degree of influence over the activities of another person for the purposes of section 47(3); that is, whether the two are “associated” under the business acquisition prohibition. This assessment matters because a proposed transaction by one company could raise issues if there is overlap between the target and an associated person of the acquirer. The factors include: shareholding or voting rights that provide the ability to influence key decisions; the right to appoint or remove directors or key executives; veto powers over strategic decisions; financial arrangements that create economic dependency; and contractual agreements, informal arrangements, or historical patterns of deference.

• Removing the qualifier that the assets are ‘of a business’ in the business acquisition prohibition: This is to ensure that the prohibition applies to the acquisition of any ‘asset’. 

• Introduces new protections for confidential information provided to the Commission: The Bill will introduce additional criteria that the Commission must consider before releasing confidential information, which will limit the application of the Official Information Act. 

The Bill also proposes amendments that are likely to have significant (and potentially unintended) consequences. These include:

• Introducing a new prohibition for predatory pricing (new section 36C): Under the new test, a person with substantial market power’s pricing will be deemed to be a misuse of market power if, for a sustained period, it prices below Average Variable Cost or Average Avoidable Cost. Pricing will also be deemed to be a misuse of market power if pricing is above Average Variable Cost or Average Avoidable Cost but below Long-run Average Incremental Cost or Average Total Cost if the pricing is for an exclusionary purpose. This new provision, if passed in its current form, will create significant uncertainty. For example, the Bill does not specify what “pricing below cost” means in practice and whether it is assessed at the level of a single product, a service line, or overall pricing strategy. Further, while the provision does not apply to “short-term” pricing and “short-term” is defined to mean pricing for a period not more than 3 months in aggregate over a 12-month period, there is no definition of “sustained period”. We have concerns that these uncertainties, when combined with the non-rebuttable presumption, risk unintended consequences and expanding the scope of predatory pricing beyond its traditional definition. 

• Granting the Commission suspensory powers for proposed and completed transactions: The Bill proposes granting the Commission new powers to suspend acquisitions for up to 40 working days where it has “reasonable grounds to believe” suspension is necessary to protect competition while it assesses whether the acquisition may breach section 47. For completed transactions, the acquirer must “safeguard” the business and its assets during the suspension period, with the Commission determining what safeguarding entails. While the Commission cannot require clearance of a completed acquisition, this is a significant development given the broad discretion involved and the absence of an explicit time limit on when the power can be exercised, though arguably, if a significant time has elapsed since completion, the Commission may struggle to justify that suspension is necessary to protect competition. 

• Granting the Commission the power to require merger parties to apply for clearance if it has reasonable grounds to believe a proposed acquisition may breach s 47. The person given a direction by the Commission under this new provision must seek clearance or authorisation for the acquisition if they want to proceed with the merger. This represents a significant shift from the current regime, where the Commission cannot compel parties to apply for clearance and can only prevent a merger by seeking court orders. Effectively, this change reverses the onus of proof and increases regulatory risk for merger parties.

• Repealing the saving provision for business acquisitions (section 46): The Bill proposes to remove the current safeguard that excludes arrangements for the acquisition or disposition of business assets or shares from the prohibitions in Part 2 of the Commerce Act (such as the cartel prohibition and misuse of market power prohibition). This saving provision is important where two competitors are merging as otherwise the mere sale of a business to a competitor could raise questions under the cartel prohibition. The explanatory note states the repeal is justified because section 83(6) already provides that a person will not be liable to a pecuniary penalty under both Parts 2 and 3; however, we consider that section 83(6) does not provide sufficient protection to merger parties and the proposed amendment risks unintended consequences, particularly given breach of the cartel prohibition is a per se criminal offence. 

• Expanding the substantial lessening of competition test to explicitly cover conduct that creates, strengthens or entrenches market power. While this amendment was intended in part to bring New Zealand in line with recent Australian law, the equivalent change in Australia was limited to the mergers context following submissions raised that applying it to other prohibitions including the Australian equivalent of the misuse of market power prohibition would capture pro-competitive conduct, such as businesses with significant market power seeking patent or design rights over innovations that may give it a market advantage or price-matching rivals. We share the concerns raised in Australia about the application of this amendment across the Commerce Act and consider it could have unintended consequences, including chilling pro-competitive commercial behaviour. 

What other amendments are proposed? 

Beyond these headline changes, the Bill proposes further amendments to strengthen enforcement and regulatory oversight. The Commission will be empowered to assess patterns of serial acquisitions over time, and have new powers to recommend pro competition regulation. Confidentiality protections will be expanded, with orders lasting up to 10 years and penalties for breach significantly increased. Whistleblower safeguards will be introduced to prevent retaliation or victimisation, and courts will be able to issue performance injunctions to restore competition following contraventions. Technical updates modernise information-gathering powers, search warrant provisions, and processes for incorporating material by reference, while amendments to co operation arrangements enable multilateral engagement with overseas regulators.

Notably, despite being announced as part of the earlier reforms, the Bill does not include the previously signalled changes to clarify that the Act’s prohibitions apply to algorithmic or AI-driven conduct. 

When will these changes come into force? 

The Bill provides for different commencement dates. Most provisions, including the amendments to allow behavioural undertakings, class exemptions, market studies powers, and confidentiality protections, will come into force the day after Royal assent. However, the key competition law reforms, including the new predatory pricing prohibition, the Commission's suspensory and call-in powers, the substantial lessening of competition test amendment and the serial acquisitions amendments, will come into force 6 months after Royal assent. Amendments to clearance and authorisation processes will apply only to applications made on or after the commencement date.

What’s next?

The Bill has not yet had its first reading and will need to progress through the full legislative process. We expect there to be an opportunity to make submissions when the Bill is considered by the Select Committee, and MinterEllisonRuddWatts will be making submissions on the changes at the appropriate time. The Government’s stated intention is to pass the Bill by mid 2026. 

If you have any questions about how any of this may apply or concerns about how these changes may affect your business, please speak to one of our competition law experts. 

This article was authored by Soomin Yang, a solicitor in our Corporate and Commercial team.