LegalResearchFoundation

This article examines the recent amendment to New Zealand's Commerce Act 1986, which replaces the purpose-based misuse of market power prohibition with an effects-based test. We explore the practical challenges of misuse of market power regulation in the context of small market economies, with reference to global digital platforms as a topical case study. The new effects-based test potentially will provide a better mechanism for distinguishing competition on its merits from exclusionary conduct, but practical impediments to effective enforcement remain. We recommend allowing the new effects test to bed in before considering whether any other, more bespoke, regulation of digital platforms is desirable. We note that better international co-ordination will also enable New Zealand to benefit from initiatives led by international regulators in this space, to the extent that actions by such regulators have the propensity to benefit New Zealand consumers.

Cartel activity was criminalised in Aotearoa New Zealand on 8 April 2021. This article examines the leniency provisions that exist for cartel activity and questions their existence on equality grounds. Leniency or immunity is available for the first participant in a cartel arrangement to disclose the activity to the New Zealand Commerce Commission and cooperate with the subsequent prosecution. There is a paradox where criminalisation of the activity results in harsher sanctions, but this is combined with the ability for offenders to request full immunity for disclosing the activity. The outcome is the self-disclosing cartel participant retains the benefits from the historic cartel activity and incurs no traditional sanction. No other crime offers the same level of immunity or leniency provisions. An objective of sentencing criminal activity is ensuring that similar offences, committed by similar offenders, receive similar sanctions. Leniency or immunity provisions result in similar offences, committed by similar offenders, receiving different sanctions.

This article advocates banning employee restraints of trade by exposing labour markets to competition law. The author contends it would be good competition and labour policy to repeal the Commerce Act's employment law exceptions: ss 7, 44(1)(c) and 44(1)(ƒ). Doing so should render employee and contractor restraints of trade illegal cartel provisions because they restrict output and stifle innovation to the detriment of consumers. The author argues that existing common law on restraints of trade is not fit for purpose. He observes that current law does not protect employers??? proprietary interests nearly as well as intellectual property remedies; and that current law otherwise unfairly harms workers and their dependents.

The conferral of a competition studies power on the Commerce Commission invites a reassessment of the nature of New Zealand competition law. The new power sits uncomfortably with some traditional conceptions of competition law understood in terms of the enforcement of prohibitions based on firm conduct causing identifiable economic harm to individual markets. This article contends that competition law has always been broader than the narrow technocratic application of economic principles. Enactment of a competition studies power confirms this and signifies a maturing of our competition law regime.

The provisions that apply the Commerce Act 1986 to the Crown are outdated, and do not reflect changes over the past nearly 40 years, including reforms of the public sector???s structure and scope. Any revision will require the drawing of new lines as to where competition law should apply in full. This article suggests that public bodies should only be able to limit competition where expressly authorised by Parliament, it is reasonably necessary to achieve some public purpose or it is permitted by a Commerce Commission authorisation.

The purpose of the Commerce Act 1986 is to promote competition in markets for the long-term benefit of consumers within New Zealand. Competition law is often said to have the objective of promoting consumer welfare, but its meaning is uncertain and cannot be equated with the consumer surplus standard in neoclassical economics. Despite common consumer welfare objectives, competition and consumer protection laws are conceptualised as having different but complementary roles and make different assumptions about consumers. Competition law does not always insist that consumers behave like fully informed, individually rational consumers, it sometimes ignores the choices and preferences of consumers, and prominent cases have accepted consumer deception and manipulation can be a breach of competition law. These developments weaken the link between competition law actions and the promotion of the consumer surplus and raise questions about exclusive reliance on neoclassical economics to define the objectives and shape the application of competition law. They also show that competition law and consumer protection law are increasingly being used to address similar market problems, especially in relation to digital platforms, and new hybrid laws and regulations are being created.