The Commerce Commission is investigating mergers of tertiary education institutions, and is advising them that they must be aware that they are covered by the Commerce Act.
Commission Chairman Dr Alan Bollard said the Commission's legal opinion is that tertiary institutions are in competition with each other for students, and they are not exempted from the Act by any other legislation.
The Act prohibits anti-competitive behaviour and business acquisitions that result in dominance being acquired or strengthened in any markets.
"To prevent possible breaches, it is important that all tertiary institutions know that the Act applies to them, understand its general principles and get legal advice about mergers or business practices that they are unsure of," Dr Bollard said.
"We are happy to talk to tertiary institutions and explain what the law says and how the Commission operates. We cannot give legal advice about specific business acquisitions or practices, but that is available from lawyers with experience in competition law."
The Commission has investigated the merger of Massey University and Wellington Polytechnic and decided that competition issues did not arise.
"Should the merger go ahead there would be little aggregation of market power," Dr Bollard said. "Where courses do over-lap, which is particularly in business studies, students will still be able to choose from several other institutions offering similar courses."
The Commission is also looking at mergers of tertiary institutions in Auckland and Dunedin. Its preliminary views are that there too, the proposed mergers do not appear to pose dominance problems.
All the institutions contacted by the Commission have been co-operative and quite open that they knew little about how the Act applies to them.
"Because of this lack of knowledge we will continue to monitor the tertiary education sector and will happily provide information to encourage compliance with the law," Dr Bollard said.
Dr Bollard said that competition gives consumers - in this case students - more power as customers. It leads to more choice, better quality service and better prices.
He said he was glad to see Christchurch Polytechnic welcoming a move by Southland Polytechnic to offer courses in Christchurch by saying that competition would bring benefits.
He stressed that the Commerce Act does not tell tertiary institutions what they should or should not teach. The Act protects the competitive process by prohibiting anti-competitive behaviour. It does not define how any organisations should behave or develop, nor how sectors of the economy should develop.
Ultimately, it is choices made by suppliers, competitors and customers that determine the shape of the economy.
Media contact: Commerce Act Manager Jo Bransgrove
Phone work (04) 498 0958
Communications Officer Vincent Cholewa
Phone work (04) 498 0920
Commission media releases can be viewed on its web site www.comcom.govt.nz
