The Commerce (Cartels and Other Matters) Amendment Act 2017 (Amendment Act) came into force on 15 August 2017 and is significantly different to the original Bill introduced almost six years ago. The new cartel provisions apply to every new contract, arrangement or understanding entered in to from 15 August 2017, with a nine month transition period for pre-existing arrangements.
A “cartel provision” is a provision that has the purpose, effect, or likely effect of price fixing, restricting output, or market allocating in relation to the supply or acquisition of goods or services in New Zealand.
The Amendment Act places a prohibition against entering into a contract or arrangement, or arriving at an understanding that contains or gives effect to a “cartel provision” (previously the prohibition was limited to “price fixing”).
There are three new exceptions to the “cartel provision”:
- collaborative activity;
- vertical supply contracts; and
- joint buying and promotion.
It is on the person relying on the exception to prove that it applies. This means that if proper steps are taken at the beginning of an arrangement, it can be structured to protect legitimate competitive conduct.
The Amendment Act also introduces a new collaborative activity clearance regime where the Commerce Commission can give clearance to certain contracts, agreements or understandings that contain cartel provisions subject to certain guidelines. The applicant must demonstrate the cartel provisions will not substantially lessen competition.
Businesses should now ensure that they are compliant with the Amendment Act before the nine month transition period expires.