Review of section 36 of the Commerce Act and other matters

The Government has decided to change New Zealand’s law relating to the misuse of market power (section 36 of the Commerce Act), along with other minor changes to the treatment of intellectual property rights and covenants in the Commerce Act.

Objectives of the changes

The Commerce Act 1986 seeks to promote competition in markets for the long-term benefit of consumers. These changes will support businesses to compete fairly on their merits and for the Commerce Commission to take action against anti-competitive conduct. 

Section 36 of the Commerce Act is designed to prevent businesses with substantive market power from suppressing competition. The current test for determining whether a business has acted anti-competitively is costly and difficult to enforce, which reduces incentives to comply with the law.

The Government is going to strengthen the law to prohibit firms with market power from engaging in conduct that substantially lessens competition, regardless of whether they would have done the same thing if they didn’t have market power.

The changes will also remove provisions in the Commerce Act that shield some types of intellectual property-related conduct from being examined under competition law. The vast majority of intellectual property-related conduct is unlikely to raise competition concerns. However, the Government believes that when such conduct does raise concerns, it should be able to be assessed under competition law like any other type of conduct.

Other amendments to the Commerce Act include:

  • increasing penalties for businesses engaging in anti-competitive mergers
  • technical changes to the treatment of anti-competitive covenants
  • increasing the maximum number of Commerce Commissioners from six to eight to reflect the Commission’s growing responsibilities in recent years
  • making it easier for the Commerce Commission to cooperate with other domestic agencies by sharing information it holds, subject to appropriate safeguards.

A bill will be introduced early in 2021, as Parliamentary scheduling allows.

You can find out more about the changes by reading the following documents:

Background to the targeted review

In 2015 MBIE released an issues paper on three main matters, one of which was whether section 36 of the Commerce Act was working effectively.

Find out more about the 2015 review

As a result of this review, MBIE decided to proceed with the publication of a discussion document titled Review of section 36 of the Commerce Act and other matters on 25 January 2019. This addressed three matters including:

  • options to strengthen New Zealands prohibition against the misuse of market power by aligning it with Australia and other developed economies
  • whether to repeal sections of the Commerce Act that shield some intellectual property arrangements from competition law
  • whether to make technical changes to the treatment of covenants under the Act.

Consultation closed on 1 April 2019, and a total of 29 submissions were received.

View the consultation document

View the submissions(external link)

Last updated: 08 June 2020