About market studies
A market study helps determine whether there are any factors that may be impeding competition in a market or markets for goods or services. Market studies focus on the structure and behaviour of the market itself, not the actions of any specific company.
Market studies allow for the identification of any factors that are preventing, restricting or distorting competition. Examples of such factors may include:
- costly, out-dated regulations
- restricted access to key infrastructure
- widespread use of restrictive terms in contracts, or
- undue constraints on the ability of consumers to change suppliers.
Market studies are performed by more than 40 competition agencies worldwide. They provide governments and the public with an in-depth understanding of how sectors and markets work.
Initiating a market study
Under the Commerce Act, market studies can be initiated by the Minister of Commerce and Consumer Affairs or self-initiated by the Commerce Commission. In either case, the initiator must be satisfied that carrying out the study is in the public interest.
A study is considered to be in the public interest if it promotes the purpose of the Commerce Act – to promote competition in markets for the long-term benefit of consumers within New Zealand. Some or all of the following (non-exhaustive) criteria may be relevant:
- there are existing indications of competition problems in the market (such as high prices or low levels of innovation)
- the market is of strategic importance to the New Zealand economy or consumers
- it is likely there will be viable solutions to any issues that are found
- a formal Commerce Commission study would add value above work that could be done by other government agencies.
Process for undertaking a market study
Information about the process for undertaking a market study is available on the Commerce Commission’s website(external link).
Timeframe for completing a market study
The length of time to complete a market study will depend on the specifics of the study, the terms of reference and the information and analysis required.
Potential outcomes of a market study
The Commerce Commission must prepare and publish a final report setting out its findings.
The report might dispel views that competition is restricted or distorted. Alternatively, it might confirm that there are competition problems and make recommendations to Government as to how competition could be improved.
The Commission recommendations are non-binding, but the Government will be required to publicly respond to the recommendations in a reasonable timeframe.