Avoiding anti-competitive behaviour
This page was updated3 months ago
Anyone who runs a business in New Zealand must comply with the Commerce Act, which aims to promote competition in markets for the long-term benefit of consumers.
Competitive markets help to keep prices down and ensure that the quality of goods and services remains high. Competition also ensures consumers have a range of choices, and firms have incentives to innovate, invest and operate efficiently. Anti-competitive behaviour can jeopardise all of this, as well as a company’s ability to win new customers.
It is important that businesses are aware of what they can and cannot do when talking to their competitors. The Commerce Act prohibits anti-competitive agreements between firms such as agreements to fix prices, allocate markets or restrict output.
In addition, it is important for purchasers, such as procurers, to be aware of the rules around anti-competitive conduct so they can help detect illegal behaviour, such as bid rigging. This type of anti-competitive conduct prevents open and effective competition and means procurers are unlikely to achieve best value for money for their business, customers, and in some cases, taxpayers.
The Commission can take enforcement action against businesses and individuals who breach the Commerce Act and the court can impose significant penalties for breaches against both businesses and individuals.
Businesses should seek independent legal advice to ensure they are not at risk of breaching the Commerce Act.
The Commission's role in dealing with anti-competitive behaviour
One of our central purposes is to safeguard the integrity of competitive markets to ensure businesses and consumers feel confident they are not being unfairly disadvantaged. To achieve this, it is important New Zealanders understand our role and the ways in which we exercise our powers and functions.
What is a competitor?
Competitors are other businesses who can offer the same or similar goods and services to your customers.
What is a cartel?
A cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price fixing, sharing markets, rigging bids or restricting output of goods and services. This includes such conduct in relation to interests in land.
Agreements that substantially lessen competition
Agreements between businesses are a normal and important part of how markets work. But some agreements harm competition, resulting in higher prices, fewer choices and lower quality of goods and services for consumers.
Misuse of Market Power
Some businesses have substantial market power. This in itself is not illegal. However, under the Commerce Act it is illegal for a business with a substantial degree of market power to engage in conduct that has the purpose, effect, or likely effect of substantially lessening competition in a market.
Anti-competitive land covenants
It is common for land to be subject to an agreement which affects how the land can be used. This is known as a covenant.
Resale price maintenance
Resale price maintenance occurs when a supplier of goods enforces, or tries to enforce, a minimum price at which the reseller must on-sell those goods.
The Application of Competition Law to Intellectual Property Rights
Intellectual property law and competition law share the common purpose of promoting innovation and dynamic efficiency, and enhancing consumer welfare. However, anti-competitive conduct involving intellectual property may breach the Commerce Act.
Collaboration and Sustainability Guidelines
The Commission has issued guidance for businesses who are considering collaborating with their competitors to pursue sustainability goals.
These Guidelines set out the factors that the Commission considers when assessing collaboration between competing businesses for sustainability objectives. We explain when collaboration for sustainability objectives is more or less likely to harm competition. We also explain how, through the clearance and authorisation processes, New Zealand’s competition laws can accommodate collaboration between businesses even when it may harm competition.