The Government has today announced upcoming changes to New Zealand's merger control regime, following other recent announcements of changes to our competition law. In announcing the changes today, the Minister of Commerce and Consumer Affairs stated that the changes "lift the bar" on which mergers can proceed.
The proposed changes include:
- New powers to target non-notified mergers: New Zealand has a voluntary merger control regime, which means that parties are not required to notify the Commerce Commission or apply for clearance of proposed mergers. The Commission has, however, had a focus on non-notified mergers that may raise competition issues in recent years. The changes will bolster the Commission's powers in relation to non-notified mergers, by providing the Commission with a "stay and hold" power to suspend the completion of a merger for up to 40 working days, as well as a "call-in" power to require parties to seek clearance if the Commission considers a transaction may substantially lessen competition.
- Ability to accept behavioural undertakings: Under the current regime, the Commission can only accept structural undertakings (ie divestments) in giving clearance or authorisation for a merger. The changes will enable the Commission to accept behavioural undertakings (which involve commitments by merging parties about their future conduct to remedy a competition issue) in giving clearance.
- Clarifying aspects of the competition test for mergers: The changes are targeted at making clear that the substantial lessening of competition test captures 'killer acquisitions' of startups by dominant firms, and creeping acquisitions (involving a pattern of small acquisitions over a three year period). Changes are also proposed to:
- clarify that the term “assets of a business” includes rights, infrastructure and land – this is relevant to whether it is the merger control provisions of the Commerce Act or other non-merger provisions that apply to an arrangement, and has been said to be intended to "help businesses understand whether deals involving things like machinery, licenses, or undeveloped land fall within the merger regime".
- clarify when a partial acquisition may raise competition concerns.
- New timeframes: The Commerce Act currently provides for the Commission to make a decision on a clearance within 40 working days, but this is frequently extended. The changes propose a new statutory timeframe of up to 140 – 160 working days for complex merger decisions, and a requirement for the Commission to publish full reasons for a decision within 20 working days of a decision being made.
The changes follow other recent announcements (summarised here) aimed at providing more certainty for competitor collaboration. The announcement today also confirms that a new test is proposed to target predatory pricing by businesses with substantial market power, and that the reforms will confirm that the existing prohibitions in the Commerce Act apply to conduct carried out using AI or algorithms.
Once the Bill containing the changes has been introduced and referred to select committee, there will be an opportunity to make submissions. If you have any questions about how the changes might impact your business, please contact a member of our competition law team.
