The Government has announced widespread changes to the Commerce Act, which we summarise below.
Many are sensible; some long overdue:
- The Commerce Commission will get, for example, the power to accept behavioural undertakings on merger clearance applications – which will make approval easier for some tricker consolidations, while still protecting workable competition.
- And we see certainty and efficiency flowing from statutory notification arrangements, which allow parties to notify proposed conduct and proceed unless the Commission objects – rather than pursue conduct through “please explain” correspondence and enforcement action, or an authorisation process. But the proof will be in the pudding.
Other amendments could spell uncertainty and increase compliance and transactions costs:
- Edits to the statutory merger control test to cover “killer acquisitions” appear unnecessary and might make it harder for start-ups to access growth capital.
- Similarly, planned changes to the “predatory pricing” test may make aggressive pricing strategies risky. Do we want competition law that chills price competition?
This group of changes is a curious choice in light of the Government’s stated focus on certainty and reliability, as well as growth, innovation and productivity.
The Government has also proposed restructuring the Commission. This proposal stems from well-founded concerns that the existing model, essentially unchanged since 1986, is anachronistic in today’s commercial environment. The trick will be realising the benefits of a modernised governance structure without sacrificing the expertise, stability and continuity of regulatory decision-making that has been a feature of the Commission structure.
We look forward to working with clients on the changes and to sharing our views on the proposed reforms as the process unfolds.
Read our snapshot outlining the key changes and dates to be aware of:
