The Commerce Commission has released a draft determination on the New Zealand Rugby Union's application to vary the authorisation it granted last year for a salary cap. Without that authorisation, the cap risked breaching the restrictive trade practice provisions of the Commerce Act.

In December 2006, the NZRU applied for the authorisation to be varied on the basis that the need to release players for the 2007 Rugby World Cup, and the associated conditioning programme, warranted a variation to the salary cap rules for 2007.

The Commission's preliminary view is that it should vary the previous authorisation because a material change of circumstances has occurred since the authorisation was granted.

Submissions are invited on the draft determination and are due by 5 April 2007.

 

Background

Section 65 of the Commerce Act allows the Commission to vary, revoke or grant a new authorisation if there have been material changes in the circumstances since it was authorised or if an authorisation was granted on the basis of information that was false or misleading.

The Commerce Commission gave public notice on 22 December 2006 that it was to consider varying its decision number 580, at the request of the NZRU.

In Decision 580, issued on 2 June 2006, the Commission authorised the New Zealand Rugby Union to enter into and to give effect to arrangements to institute a salary cap for the Provincial Unions competing in the Premier Division of the then new inter-provincial rugby competition, now known as the Air New Zealand Cup competition; and to apply new rules governing player transfers.

Under subsection 65(1)(b) of the Commerce Act, the Commission may amend an authorisation if there has been a material change of circumstances since the authorisation was granted.

Decision number 580 is available on the Commission's website.