New Zealand transitions to overhauling its competitive legal framework
In a significant move aimed at modernizing and strengthening the country's competition regime, the New Zealand government has announced plans to amend the Commerce Act of 1986 by the end of 2025. These reforms, expected to take effect from 1 January 2026, are designed to provide clearer rules, faster decisions, and stronger protections, reducing regulatory burden and improving predictability for businesses.
The amendments follow recent action taken by Australia to update its merger framework. The Treasury Laws Amendment (Mergers and Acquisitions Reform) Act 2024, passed at the end of 2024, introduces mandatory notification requirements, an amended merger test, and an extended timeframe for the assessment of mergers in Australia. The new merger regime in New Zealand will align with these Australian frameworks and introduce a new substantial lessening of competition (SLC) test that applies to conduct that creates, strengthens, or entrenches market power.
The refreshed competition regime will see several key changes. The governance and structure of the Commerce Commission, New Zealand's competition watchdog, will be refreshed. This includes the introduction of new committees comprising experts, particularly those with commercial experience. The Commission will also be empowered to assess patterns of small acquisitions over a three-year period, accept voluntary behavioral commitments for the resolution of competition concerns, and pause and assess risky mergers before their completion.
Creeping acquisitions and predatory pricing will be addressed under the new competition regime to encourage the growth of genuine competitors. The guideline for merger control by the Commission has been revised to ensure a clear regulatory framework, faster decisions, and stronger protective measures. Regulatory decisions will be delegated to committees or the chief executive and commission staff.
The new law will allow the Commerce Commission to request performance injunctions from the High Court to enforce corrective action in cases where competition has been harmed. Proof of recoupment will be scrapped under the new rules, while promotions and one-off discounts will not be captured unless a broader pattern emerges. Complex merger cases will be bound by a new statutory timeframe of 140-160 working days, with the Commission required to submit a decision summary within one day and publish its full reasons within 20 working days.
The changes to the competition regime aim to improve the Commission's ability to restore competition, particularly in digital markets. Dr John Small, the Chair of the Commerce Commission, stated that the changes will allow them to enhance competition in the economy and improve choice and quality for New Zealanders. The reforms are expected to boost competition and provide more certainty and reliability for businesses.
The proposed amendments will see a new governing board mostly comprising part-time members. The government plans to overhaul the merger regime to provide clearer rules, faster decisions, and stronger protections, reducing regulatory burden and improving predictability for businesses. The changes are a significant step towards modernizing New Zealand's economy-wide competition regime and positioning the country for future economic growth.
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