A market study is an in-depth and independent study into the factors affecting competition for particular goods or services, to find out how well competition is working and whether it could be improved. Unlike our competition enforcement and merger investigations, market studies look at the structure, conditions and performance of the market itself rather than whether there could be a breach of the Act or whether a merger is likely to raise competition issues.
By gathering and analysing information on a market we can identify whether there are features preventing it from working well. We can then look at the effects of features identified and consider how they can best be addressed using proportionate means.
Outcomes of our work may range from a ‘clean bill of health’ for the sector to, where we consider it appropriate, recommendations for changes to enhance market performance. Our recommendations are non-binding, however the Government must respond to any recommendations within a reasonable period.
We have published draft guidelines that describe our general processes and approach to all market studies. The paper can be found here.
Who decides what markets to examine?
Under the legislation, market studies can be initiated by the Minister of Commerce and Consumer Affairs or self-initiated by the Commission. In either case the initiator must be satisfied that it is in the public interest to do so. The Commission will assess the public interest by reference to the purpose of the Commerce Act, which is to promote competition in markets for the long-term benefit of consumers in New Zealand.
What is the process for a market study?
The initiator of the market study (the Minister or the Commission) will publish a terms of reference setting out the scope of the study and timeframe for completion. The Commission is also likely to issue a call for information from interested parties.
Following initiation, the Commission will commence an information-gathering phase. We will publish our findings in a draft report. Any recommendations in a final report will be non-binding on Government, but may include recommended measures to improve the performance of markets, such as changes to regulation, policy or the conduct of market participants.
When will the market studies power be in place?
The legislation came into effect on 26 October 2018. A market study can only be commenced by publication of the required information in the Gazette, including terms of reference.
When will the Commission start its market study into fuel markets?
On 3 December 2018 the Government announced it had initiated a market study into the retail fuel market for supply of petrol and diesel used for land transport in New Zealand. The terms of reference for the study were published in the Gazette on 5 December 2018, at which point the Commission was formally enabled to begin this study.