In this article we discuss the New Zealand Commerce Commission’s recent updates to its Cartel Leniency and Immunity Policy and its implications for potential applicants, as well as a general update on the Commission’s activity in the competition space including the recent Select Committee meeting where the Commission provided its views on potential legislative changes.

Part 1:  Cartel Leniency and Immunity Policy

The New Zealand Commerce Commission (NZCC) has recently published an updated Cartel Leniency and Immunity Policy and a Template Leniency Agreement, a key tool to identify and enforce cartel conduct in New Zealand.  

Background: what is a cartel and how has the policy worked to date?

A cartel is where two or more competing businesses agree not to compete with one another by price fixing, allocating markets or customers, or restricting the output or acquisition of goods and services.

Under the NZCC’s leniency/immunity policy, participants involved in cartel conduct can report the conduct to the NZCC.  If they are the first to do so, the NZCC does not already know about the conduct, and they fully cooperate with the NZCC in its subsequent investigation and assist with giving evidence against their fellow cartel members, the NZCC will:

• grant leniency to any individual or company engaged in cartel conduct, which means that the NZCC agrees not to take civil enforcement action against a company or individuals for their involvement in the cartel conduct; and
• recommend that the Solicitor-General grant immunity to any individual or company engaged in cartel conduct. The Solicitor-General then exercises their independent discretion in considering whether to grant immunity. If immunity is granted, this means no-one can take criminal proceedings in New Zealand against the company or individuals for their involvement in the cartel conduct.

If the cartel member is not the first to report the conduct, or the NZCC is already aware of the conduct, then they will not qualify for leniency/immunity but can still co-operate and obtain a discount off the penalty they would otherwise face. 

Updates to the Cartel Leniency and Immunity Policy

The key updates to the policy focus on attempted cartel conduct (ie attempts to engage in cartel conduct that do not result in actual cartel conduct).  Leniency and immunity are no longer available for ‘naked’ attempts to engage in cartel conduct (ie attempts to engage in cartel conduct, such as inviting another person to form a cartel, that do not result in actual cartel agreements).  

However, applicants may still be eligible for leniency and/or immunity in relation to an attempt to engage in cartel conduct if they meet all of the conditions of leniency and/or immunity and are able to provide material assistance in proceedings/prosecution against another party (eg, if the attempt is part of a broader set of conduct which includes cartel agreements).  

The NZCC notes that this update brings it in line with other international regulators, including Australia where the Australian Competition and Consumer Commission’s policy does not apply to corporations or individuals who have unilaterally attempted to cause others to engage in cartel conduct.

The full policy can be found here.

Part 2:  General competition law updates

New anonymous whistleblower tool for anti-competitive practices and conduct in the grocery sector

A new anonymous whistleblower tool has been launched by the NZCC which aims to help determine the key issues that are hampering competition in the grocery sector.^[1]

The concern about competition and prices in the retail grocery sector is a longstanding issue of both political and public interest, driven by the challenges posed by concerns regarding the cost-of-living.

The NZCC anticipates that the new tool will allow people to come forward to the NZCC with information relating to potential anticompetitive practices and conduct while remaining anonymous, therefore removing the risk of retaliation by the major grocery retailers.

The whistleblower tool is similar to the one launched by the NZCC in 2018 in relation to reporting alleged cartel conduct.^[2]

NZCC Overview of Key Work in 2023 / 2024

The NZCC has recently published a short document highlighting the key work carried out in 2023 and upcoming work for 2024.

The document summarises the work carried out by the NZCC’s Competition Branch (covering its competition investigations, cartels, mergers and market studies teams), as well as setting out the latest guidance papers, policy updates and changes to legislation, such as the amendment to section 36 regarding misuse of market power and the removal of the intellectual property exceptions. 

Of interest is that the NZCC currently has 16 cartel and six other competition investigations ongoing. In 2023 it decided 15 investigations (five cartel, nine competition, and one merger), of which five have resulted in litigation and one in a compliance advice letter - ie there were nine investigations where no (or limited) action was taken by the NZCC.

Of particular interest moving forward in 2024 will be the NZCC’s draft report on the personal banking services market study due this month, its consideration of the proposed merger of Foodstuffs’ North and South Island entities, and updates on New Zealand’s first criminal prosecution for alleged cartel conduct in relation to two construction companies and two directors.

The link to the document can be found here.

Part 3:  Economic Development, Science and Innovation Select Committee

On Thursday, the NZCC’s Chair Dr John Small made some interesting comments at the Economic Development, Science and Innovation Select Committee relating to the current regime for mergers under the Commerce Act, and the level of penalties under the Fair Trading Act.

Review of the current merger regime

Australia   is currently looking at modifying the merger test to make it harder for a firm that already has substantial market power to acquire another firm where that acquisition would entrench their position within the relevant market. 

Dr Small thinks it would be worth thinking through carefully whether New Zealand should follow suit.  He said there was good reason to have symmetry with Australia, due to the volume of trans-Tasman trade. 

Review of the Fair Trading Act

At the same Select Committee meeting, Dr Small commented that the current penalty regime under the Fair Trading Act was “too low” and a source of “frustration” for the NZCC.  Dr Small commented that the Fair Trading Act was passed in 1986 and that “it would be timely to revisit not just the penalties regime but some other aspects of [the Act] as well.” The NZCC pointed to the much higher penalties in Australia for similar conduct.

We will keep you updated with any developments in this area. 

Get in touch

Please get in touch with one of our experts to discuss any aspect of this article and its potential implication for you and/or your business.

Special thanks to Henry King and Achi Simhony for their assistance in writing this article.