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.
A business with market power may be able to damage the competitive process if it can sufficiently hinder its current rivals, restricting their ability to compete, or prevent them from competing entirely. It may also be able to deter potential rivals, impose barriers to slow down entry or expansion of current and potential rivals, or entirely prevent them from entering a market.
There are many types of behaviour that are illegal under section 36 of the Commerce Act. It is often hard to distinguish anti-competitive behaviour from aggressive, but legal, competitive behaviour that benefits consumers. For example, cutting prices to win customers is usually a sign of competition, but in some circumstances can harm competition.
We have drafted Misuse of Market Power Guidelines that explain how the Commission will assess conduct under section 36, including our approach to applying the ‘substantial lessening of competition’ test to unilateral conduct.
This web page provides information for businesses with substantial market power who are wanting to comply with the law, and for competing businesses who might be affected by the actions of a business with substantial market power.
Click below for information relevant to your business needs.
If your business has substantial market power it is important to understand how to comply with the Misuse of Market Power law, section 36 of the Commerce Act. A business has substantial market power when its actions are not constrained by competition.
