Background
9. The Commerce Act 1986 is a generic competition law which is a key part of the business law framework in New Zealand. The over-arching presumption in the Act is that competition is the most effective means to achieve long-term consumer welfare where competition is possible. The overall purpose statement of the Act is "to promote competition in markets for the long-term benefit of consumers within New Zealand". To this end, Part 2 prohibits or restricts anti-competitive conduct, while Part 3 restrains business acquisitions (mergers and takeovers) which substantially lessen competition unless there are net public benefits.
10. Parts 4 and 4A however, relate to markets where competition is not possible. Specifically, Part 4 allows goods or services to be placed under price/revenue and/or quality control (economic regulation) where there is limited or lessened competition and control would be in the interests of acquirers.1 Control may be imposed by Order-in-Council on the recommendation of the Minister of Commerce or the Minister of Energy (for energy sectors). Two inquiries have been undertaken by the Commerce Commission under these provisions, into airports (1999-2003) and gas pipelines (2003-2005).2
11. Part 4A applies a "thresholds" regime for electricity lines businesses, which enables price and quality control to be imposed if businesses breach thresholds set by the Commission. Part 4A was passed in 2001.
12. Sections 70-73 of Part 5 set out the processes for operating price control.
13. On 22 May 2006 the Minister of Commerce announced that Parts 4 and 5 would be reviewed, and on 13 September the Ministers of Commerce and Energy announced the inclusion of Part 4A in the review. On 4 April 2007 Cabinet agreed to release of a discussion paper "Review of the Regulatory Control Provisions of the Commerce Act 1986" [EDC Min (07) 7/13].
14. Submissions were received from 45 parties. A list of submitters is attached as Appendix A. Submissions are posted on MED's website. A summary of submissions is available from the Minister's office.
Back to Top