New Zealand

• Pages: 647-670

647

Chapter XX

NEW ZEALAND

A. The Sources and Basics of New Zealand Antitrust Law

New Zealand’s antitrust law is derived from the Commerce Act 1986,

and case law decided under it. The Commerce Act’s express purpose “is

to promote competition in markets for the long-term benefit of

consumers within New Zealand.”1 The Commerce Act applies to all

individuals and businesses, including state-owned enterprises, local

government, and government departments to the extent they engage in

trade. The Commerce Act has extraterritorial effect, but its reach is

limited “to the engaging in conduct outside New Zealand by any person

resident or carrying on business in New Zealand to the extent that such

conduct affects a market in New Zealand.”2

The Commerce Act is enforced by the New Zealand Commerce

Commission. Along with certain adjudicatory responsibilities, 3 the

Commission has wide investigative powers that enable it to require

businesses and individuals to provide information,4 obtain and execute

search warrants, 5 and control access to information through

confidentiality orders.6

The Commerce Act expressly prohibits a broad range of

anticompetitive collective and unilateral practices. Central to those

prohibitions is broad proscription of:

1. Commerce Act 1986, 1986 Pub. Act No. 5, § 1A (N.Z.) [hereinafter

Commerce Act].

2. Id. § 4(1).

3. These responsibilities include the consideration of applications for

merger clearance and applications for authorization of restrictive trade

practices. Authorization is granted if the Commission is satisfied that the

practice considered to be otherwise in breach of the Commerce Act

creates efficiencies and other public benefits that outweigh the detriment

arising from the loss of competition.

4. Commerce Act, §§ 98(a)-(c).

5. Id. §§ 98A-B.

6. Id. § 100.

648 Antitrust Issues in International IP Licensing Transactions

Provisions in contracts, arrangements, or understandings that

have the purpose, effect, or likely effect of substantially

lessening competition in a market;7 and

Actions by a firm or firms that take advantage of a

substantial degree of market power to prevent competition

either in the market in which the firm has that power, or in

any other market.8

1. Agreements That Restrict Competition

The Commerce Act expressly prohibits certain types of trade

practices that are deemed to unacceptably restrict competition. The

practices expressly prohibited by the Commerce Act include: price-

fixing, which is per se illegal and is deemed substantially to lessen

competition contrary to section 27 of the Commerce Act;9 contracts,

arrangements or understandings containing exclusionary provisions

amounting to a group boycott;10 and resale price maintenance.11

The Commerce Act also prohibits agreements falling outside those

specifically identified in the Commerce Act if a provision in an

agreement in question substantially lessens competition. The inquiry

into whether a provision in an agreement substantially lessens

competition requires identification of both the market or markets affected

and the net effect of the provision in question on the competitive process

in those markets.12

In analyzing that net effect, the Commerce Commission and the

New Zealand courts effectively apply a “rule of reason” analysis. The

analysis focuses on the difference between actual market outcome and

counterfactual outcome (i.e., the outcome that would or would most

likely have resulted but for the provision in question).13 Where the actual

outcome results in less competition than the counterfactual outcome, the

7. Id. § 27.

8. Id. § 36.

9. Id. § 30.

10. Id. § 29. There is a “rule of reason” defense in § 29(1A), however, if the

defendant firm is able to demonstrate the exclusionary arrangement does

not, in fact, substantially lessen competition in the relevant market.

11. Id. §§ 37-42.

12. Air N.Z. v. Commerce Comm’n, [2004] 11 T.C.L.R 347, 340-43 (H.C.).

13. See, e.g., Tru Tone Ltd. v. Festival Records Retail Marketing, [1988] 2

N.Z.L.R. 352, 362 (C.A.); ANCO v. AFFCO, [2006] 3 N.Z.L.R. 351

(C.A.).