Commerce (Cartels and Other Matters) Amendment Act 2017

1: Title
This Act is the Commerce (Cartels and Other Matters) Amendment Act 2017.
2: Commencement
1: This Act comes into force on the day after the date on which it receives the Royal assent.
2: However, the following sections (which relate to the insertion into the principal Act of new sections relating to international shipping and the repeal of parts of the Shipping Act 1987
a: sections 9 and 10
b: sections 33 and 34
3: Principal Act amended
This Act amends the Commerce Act 1986 principal Act 2017-08-15 Commerce Act 1986
1: Substantive amendments to principal Act
4: Interpretation
Section 2(1) cartel provision section 30A(1) collaborative activity section 31(4) international liner shipping service
a: means a service exclusively for the carriage of goods by sea from a place in New Zealand to a place outside New Zealand, or from a place outside New Zealand to a place in New Zealand, that—
i: operates at regular intervals on a fixed route or fixed routes in accordance with an advertised schedule; and
ii: is supplied, as its capacity allows, to any paying customer; but
b: excludes a service for the carriage of goods to or from a ship or the loading or unloading of a ship market allocating section 30A(4) price fixing section 30A(2) restricting output section 30A(3)
5: Application of Act to conduct outside New Zealand
1: The heading to section 4 to conduct outside New Zealand
2: Section 4
1AA: For the purposes of this Act,—
a: a person engages in conduct in New Zealand if any act or omission forming part of the conduct occurs in New Zealand; and
b: a person ( person A person B section 90
3: Section 4(3)
6: New section 6C inserted
The following section is inserted after section 6B
6C: Transitional, savings, and related provisions
The transitional, savings, and related provisions set out in Schedule 1AA have effect according to their terms.
7: Section 29 repealed
Section 29 Cartels
8: New heading and sections 30 to 33 substituted
The heading above section 30 section 34 Cartel provisions
30: Prohibition on entering into or giving effect to cartel provision
No person may—
a: enter into a contract or arrangement, or arrive at an understanding, that contains a cartel provision; or
b: give effect to a cartel provision.
30A: Meaning of cartel provision and related terms
1: A cartel provision
a: price fixing:
b: restricting output:
c: market allocating.
2: In this Act, price fixing
a: the price for goods or services that any 2 or more parties to the contract, arrangement, or understanding supply or acquire in competition with each other; or
b: any discount, allowance, rebate, or credit in relation to goods or services that any 2 or more parties to the contract, arrangement, or understanding supply or acquire in competition with each other.
3: In this Act, restricting output
a: the production or likely production by any party to a contract, arrangement, or understanding of goods that any 2 or more of the parties to the contract, arrangement, or understanding supply or acquire in competition with each other; or
b: the capacity or likely capacity of any party to a contract, arrangement, or understanding to supply services that any 2 or more parties to the contract, arrangement, or understanding supply or acquire in competition with each other; or
c: the supply or likely supply of goods or services that any 2 or more parties to a contract, arrangement, or understanding supply in competition with each other; or
d: the acquisition or likely acquisition of goods or services that any 2 or more parties to a contract, arrangement, or understanding acquire in competition with each other.
4: In this Act, market allocating
a: the persons or classes of persons to or from whom the parties supply or acquire goods or services in competition with each other:
b: the geographic areas in which the parties supply or acquire goods or services in competition with each other.
30B: Additional interpretation relating to cartel provisions
In this Act, in relation to a cartel provision,—
a: if a person is a party to a contract, arrangement, or understanding, each of the person's interconnected bodies corporate is taken to be a party to the contract, arrangement, or understanding; and
b: if a person ( person A person B
c: a reference to persons in competition with each other for the supply or acquisition of goods or services includes a reference to—
i: persons who are, or are likely to be, in competition with each other in relation to the supply or acquisition of those goods or services; and
ii: persons who, but for a cartel provision relating to those goods or services, would, or would be likely to, be in competition with each other in relation to the supply or acquisition of those goods or services.
30C: Cartel provisions generally unenforceable
1: No cartel provision is enforceable.
2: However, nothing in subsection (1) section 31, 32, 33, 44A(4) and (5), or 44B
31: Exception for collaborative activity
Exception for entering into cartel provision
1: Nothing in section 30(a)
a: the person and 1 or more other parties to the contract, arrangement, or understanding are involved in a collaborative activity; and
b: the cartel provision is reasonably necessary for the purpose of the collaborative activity. Exceptions for giving effect to cartel provision
2: Nothing in section 30(b)
a: the person and 1 or more other parties to the contract, arrangement, or understanding that contains the provision are involved in a collaborative activity; and
b: the cartel provision is reasonably necessary for the purpose of the collaborative activity.
3: Nothing in section 30(b)
a: the person and 1 or more other parties to the contract, arrangement, or understanding were involved in a collaborative activity that has ended; and
b: the cartel provision was reasonably necessary for the purpose of the collaborative activity; and
c: the collaborative activity did not end because the lessening of competition between any 2 or more parties became its dominant purpose. Meaning of collaborative activity
4: In this Act, collaborative activity
a: is carried on in co-operation by 2 or more persons; and
b: is not carried on for the dominant purpose of lessening competition between any 2 or more of the parties.
5: The purpose referred to in subsection (4)﻿(b)
32: Exception for vertical supply contracts
1: Nothing in section 30
a: the contract is entered into between a supplier or likely supplier of goods or services and a customer or likely customer of that supplier; and
b: the cartel provision—
i: relates to the supply or likely supply of the goods or services to the customer or likely customer, including to the maximum price at which the customer or likely customer may resupply the goods or services; and
ii: does not have the dominant purpose of lessening competition between any 2 or more of the parties to the contract.
2: The purpose referred to in subsection (1)﻿(b)﻿(ii)
33: Exception for joint buying and promotion agreements
A provision in a contract, arrangement, or understanding does not have the purpose, effect, or likely effect of price fixing if the provision—
a: relates to the price for goods or services to be collectively acquired, whether directly or indirectly, by some or all of the parties to the contract, arrangement, or understanding; or
b: provides for joint advertising of the price for the resupply of goods or services acquired in accordance with paragraph (a)
c: provides for a collective negotiation of the price for goods or services followed by individual purchasing at the collectively negotiated price; or
d: provides for an intermediary to take title to goods and resell or resupply them to another party to the contract, arrangement, or understanding.
9: New heading inserted
The following heading is inserted above section 43 Exceptions to Part 2 2019-08-14 Commerce Act 1986 refer section 2(2)﻿(a): sections 9 and 10 come into force on the day that is 2 years after the date on which this Act receives the Royal assent.
10: New sections 44A and 44B inserted
The following sections are inserted after section 44
44A: Exceptions in relation to international liner shipping services
1: Nothing in section 27(1) applies to a person in relation to a provision of a contract, arrangement, or understanding if, at the time of entering into or arriving at the contract, arrangement, or understanding, the circumstances in subsection (6)
2: Nothing in section 27(2) applies to a person in relation to a provision of a contract, arrangement, or understanding if, at the time of giving effect to the provision, the circumstances in subsection (6)
3: Nothing in section 27(4) affects the enforceability of a provision in any contract to which subsection (1) or (2)
4: Nothing in section 30(a) subsection (6)
5: Nothing in section 30(b) subsection (6)
6: The circumstances are that—
a: the person and all other parties to the contract, arrangement, or understanding that contains the provision are supplying an international liner shipping service in co-operation with each other; and
b: the co-operation improves the service supplied to owners or consignors of goods carried at sea; and
c: the provision relates to—
i: a specified activity carried out for the purposes of the co-operation; or
ii: an activity ancillary to a specified activity that is reasonably necessary for the purposes of the co-operation.
7: For the purposes of subsection (6)﻿(a) parties to the contract, arrangement, or understanding section 30B(a)
8: In this section,— specified activity
a: the co-ordination of schedules and the determination of port calls:
b: the exchange, sale, hire, or lease (including the sublease) of space on a ship:
c: the pooling of ships to operate a network:
d: the sharing or exchanging of equipment such as containers:
e: capacity adjustments in response to fluctuations in supply and demand for international liner shipping services.
44B: Further exception in relation to international liner shipping services (price fixing in relation to space on ship)
1: Nothing in section 30(a) subsection (3)
2: Nothing in section 30(b) subsection (3)
3: The circumstances are that—
a: the person and all other parties to the contract, arrangement, or understanding that contains the cartel provision are supplying an international liner shipping service in co-operation with each other; and
b: the co-operation improves the service supplied to owners or consignors of goods carried at sea; and
c: the provision relates to the exchange, sale, hire, or lease (including the sublease) of space on a ship between the person and 1 or more parties to the contract, arrangement, or understanding; and
d: the exchange, sale, hire, or lease (including the sublease) is carried out for the purposes of the co-operation.
4: For the purposes of subsection (3)﻿(a) parties to the contract, arrangement, or understanding section 30B(a) Acquisitions by overseas persons
11: New sections 47A to 47D inserted
The following sections are inserted after section 47
47A: Declaration relating to acquisition by overseas person
1: The Commission may apply to the High Court for a declaration under this section if an overseas person acquires, whether directly or indirectly, a controlling interest in a New Zealand body corporate through the acquisition outside New Zealand of the assets of a business or shares.
2: The High Court may make a declaration that it is satisfied that—
a: the overseas person has acquired a controlling interest in a New Zealand body corporate through the acquisition outside New Zealand of the assets of a business or shares; and
b: the acquisition of that controlling interest has, or is likely to have, the effect of substantially lessening competition in a market in New Zealand.
3: A declaration may not be made in respect of an acquisition if—
a: the application for the declaration is made more than 12 months after the date of the acquisition; or
b: the Commission has given a clearance, or granted an authorisation, under Part 5 in respect of the acquisition ( see
4: Nothing in this section limits the Commission's functions or powers under any other provision of this Act.
5: In this section and in sections 47B to 47D controlling interest
a: controls the composition of the board of the body corporate; or
b: is in a position to exercise, or control the exercise of, more than 20% of the maximum number of votes that can be exercised at a meeting of the body corporate; or
c: holds more than 20% of the issued shares of the body corporate, other than shares that carry no right to participate beyond an entitlement to a specified amount in a distribution of either profits or capital; or
d: is entitled to receive more than 20% of every dividend paid on shares issued by the body corporate, other than shares that carry no right to participate beyond an entitlement to a specified amount in a distribution of either profits or capital; or
e: is the holding company (as defined in section 5(2) of the Companies Act 1993) of the body corporate; or
f: holds assets in circumstances where the holding of those assets results in the overseas person having effective control of the body corporate New Zealand body corporate overseas person
47B: Orders against New Zealand bodies corporate following declaration under section 47A
1: The Commission may apply to the High Court for an order under this section in respect of a New Zealand body corporate—
a: at the same time as the Commission applies for a declaration under section 47A
b: at any time while that application is pending or after the declaration has been made.
2: If the High Court makes a declaration under section 47A
a: cease carrying on business in New Zealand, in the market to which the declaration relates, no later than 6 months after the date of the declaration or any longer period specified by the court; or
b: dispose of shares or other assets specified by the court; or
c: take any other action (including disposing of shares or other assets) that the court considers, in all the circumstances, is consistent with the purpose of this Act.
3: Contravention of an order made under this section is a contravention of this section.
47C: Application by Commission for declaration or order
1: An application for a declaration under section 47A section 47B
2: On making an application under section 47A
3: On making an application under section 47B
47D: Revocation and variation of declarations and orders
1: The Commission, or the overseas person or New Zealand body corporate to which a declaration made under section 47A
2: The Commission, or the overseas person or any New Zealand body corporate to which an order under section 47B
3: The High Court may, if it is satisfied that there has been a material change of circumstances, do either or both of the following:
a: revoke a declaration:
b: revoke or vary any order. Amendments relating to authorisations for restrictive trade practices
12: Effect of authorisation
1: Section 58A(1) While an authorisation under section 58(1) remains in force, nothing in section 27, 30, or 30C
2: Section 58A(2) While an authorisation under section 58(2) remains in force, nothing in section 27, 30, or 30C
13: When Commission may grant authorisation
Section 59A
14: Procedure for applications for authorisation of restrictive trade practices
Section 60
3A: In relation to any application, the Commission may consult with any person who, in the opinion of the Commission, is able to assist it to determine the application.
15: Determination of applications for authorisation of restrictive trade practices
1: Section 61
1A: If authorisation is not granted within 120 working days after the date on which the application is registered, the Commission is deemed to have declined the application, subject to any alternative timetable agreed between the Commission and the applicant.
2: Section 61(6) or is deemed to result
16: Commission to prepare draft determination in relation to restrictive trade practices
1: Section 62
2: Section 62(6) The Commission may, of its own motion, determine to hold a conference in relation to the draft determination and Before determining the application, the Commission may determine to hold a conference and, if so,
3: Section 62(7) , if appropriate, and may prepare a single draft determination in relation to the applications and Clearance regime for collaborative activities
17: New sections 65A to 65D inserted
The following sections are inserted after section 65
65A: Commission may give clearances relating to cartel provisions
1: A person who proposes to enter into a contract or arrangement, or arrive at an understanding, that contains, or may contain, a cartel provision may apply to the Commission for a clearance under this section.
2: The Commission must give a clearance under this section if it is satisfied that—
a: the applicant and any other party to the proposed contract, arrangement, or understanding are or will be involved in a collaborative activity; and
b: every cartel provision in the contract, arrangement, or understanding is reasonably necessary for the purpose of the collaborative activity; and
c: entering into the contract or arrangement, or arriving at the understanding, or giving effect to any provision of the contract, arrangement, or understanding, will not have, or would not be likely to have, the effect of substantially lessening competition in a market.
3: For the purpose of subsection (2)
4: If clearance is not given within 30 working days after the date on which the application is registered in accordance with section 60(2)﻿(a), the Commission is deemed to have declined to give the clearance, subject to any alternative timetable agreed between the Commission and the person applying for clearance.
65B: Effect of clearance under section 65A
The effect of a clearance given under section 65A
a: a party to the contract, arrangement, or understanding to which the clearance relates does not contravene section 27 or 30
b: a person does not contravene section 27 or 30
c: section 30C(1)
65C: Procedures relating to clearances
1: Section 60 (except subsections (2)﻿(c) and (3)) applies to an application for a clearance under section 65A
2: Every clearance given under section 65A
65D: Revocation of clearances
1: The Commission may revoke a clearance given under section 65A
a: the clearance was given on information that was false or misleading in a material particular; or
b: there has been a material change of circumstances.
2: The Commission must not revoke a clearance unless the person to whom the clearance was given, and any other person who in the opinion of the Commission is likely to have an interest in the matter, is given a reasonable opportunity to make submissions to the Commission and the Commission has had regard to those submissions. Amendment relating to clearance for business acquisitions
18: Commission may give clearances for business acquisitions
Section 66(3) 10 working days 40 working days
19: Effect of clearance or authorisation
Section 69 section 27 or section 47 section 27, 47, or 47A Lay members of High Court
20: Lay members of High Court in certain cases
1: Section 78(1) the exercise by the High Court of its jurisdiction and powers under sections 80 to 85 in respect of proceedings which relate to any of sections 27 to 29, 36, 36A, 37, 38, or 47 the exercise by the High Court of its civil jurisdiction under section 47A 47B 47D 30 47B
2: Section 78(4)﻿(b) Pecuniary penalties generally
21: Relationship between pecuniary penalties and criminal liability
Section 79B
3: Any uncompleted proceedings for an order under this Act that a person pay a pecuniary penalty must be stayed if criminal proceedings are started or have already been started against the person for the same act or omission, or substantially the same act or omission, in respect of which the pecuniary penalty order is sought. Amendments relating to penalties for cartels
22: Pecuniary penalties
1: The heading to section 80 relating to restrictive trade practices
2: Section 80(2B)
b: in any other case, the greater of the following:
i: $10 million:
ii: either,—
A: if it can be readily ascertained and if the court is satisfied that the contravention occurred in the course of producing a commercial gain, 3 times the value of any commercial gain resulting from the contravention; or
B: if the commercial gain cannot readily be ascertained, 10% of the turnover of the person and all its interconnected bodies corporate (if any) in each accounting period in which the contravention occurred.
3: Section 80
2C: In proceedings relating to a contravention of section 30 section 31, 32, or 33
23: New section 80A substituted
Section 80A
80A: Restriction on indemnities relating to contraventions of section 30
1: A body corporate must not indemnify any director, employee, or agent, or former director, employee, or agent, of the body corporate or of any of its interconnected bodies corporate ( person A
a: any pecuniary penalty imposed on person A by the court under section 80 in respect of a contravention of section 30
b: any costs incurred by person A in defending any civil proceedings in which the pecuniary penalty referred to in paragraph (a)
2: An indemnity given in contravention of subsection (1)
3: In this section, indemnify indemnity
24: Court may order certain persons to be excluded from management of body corporate
1: Section 80C that— that the person has, in contravention of section 30
2: Section 80C
a: entered into a contract or arrangement, or has arrived at an understanding, that contains a cartel provision; or
b: given effect to a contract, arrangement, or understanding that contains a cartel provision. Amendments relating to acquisitions by overseas persons
25: Pecuniary penalties
1: The heading to section 83 relating to business acquisitions
2: Section 83
1: The court may, on the application of the Commission, order a person to pay a pecuniary penalty to the Crown if the court is satisfied that the person—
a: has contravened section 47 or 47B
b: has attempted to contravene either of those sections; or
c: has aided, abetted, counselled, or procured any other person to contravene either of those sections; or
d: has induced, or attempted to induce, any other person, whether by threats or promises or otherwise, to contravene either of those sections; or
e: has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by any other person of either of those sections; or
f: has conspired with any other person to contravene either of those sections.
1A: The amount of pecuniary penalty must not, in respect of each act or omission, exceed $500,000 in the case of an individual, or $5 million in any other case.
26: Actions for damages for contravention of Part 3
Section 84A
1: Every person is liable in damages for any loss or damage caused by that person engaging in conduct that constitutes any of the following:
a: a contravention of section 47 or 47B
b: aiding, abetting, counselling, or procuring the contravention of section 47 or 47B
c: inducing by threats, promises, or otherwise the contravention of section 47 or 47B
d: being in any way directly or indirectly, knowingly concerned in, or party to, the contravention of section 47 or 47B
e: conspiring with any other person in the contravention of section 47 or 47B Attributing conduct
27: New section 90 substituted
Section 90
90: Conduct by employees, agents, and others
1: In proceedings under this Part in respect of conduct engaged in by a person other than an individual ( person A
2: Conduct by a person ( person B person A
a: person B was a director, employee, or agent of person A, acting within the scope of person B’s actual or apparent authority; or
b: person B was a person who was acting on the direction, or with the consent or agreement (express or implied), of a director, employee, or agent of person A who was acting within the scope of the director’s, employee’s, or agent’s actual or apparent authority.
3: In civil proceedings under this Part in respect of conduct engaged in by an individual ( person C
4: In civil proceedings under this Part, conduct by a person ( person B person C
a: person B was acting at the direction, or with the consent or agreement (express or implied), of person C; or
b: person B was an employee or agent of person C and acting within the scope of person B’s actual or apparent authority; or
c: person B was a person who was acting on the direction, or with the consent or agreement (express or implied), of an employee or agent of person C who was acting within the scope of the employee’s or agent’s actual or apparent authority.
5: A reference in this section to the state of mind of a person includes a reference to—
a: the knowledge, intention, opinion, belief, or purpose of the person and the person's reasons for that intention, opinion, belief, or purpose; and
b: the state of mind of a person outside New Zealand. Appeals relating to authorisations and clearances
28: Persons entitled to appeal
1: Section 92
a: in the case of an appeal against a determination of the Commission in relation to an application for an authorisation under section 58 or 67, the applicant and any other person who—
i: has a direct and significant interest in the application; and
ii: participated in the Commission's processes leading up to the determination:
2: Section 92
ba: in the case of an appeal against a determination of the Commission under section 65A
i: the person who applied for the clearance; and
ii: any other person who is a party to the contract, arrangement, or understanding to which the application for clearance relates:
3: Section 92
c: in the case of an appeal against a determination of the Commission under section 66 in relation to a notice seeking a clearance,—
i: the person who sought the clearance; and
ii: any person whose assets, or the shares in which, are proposed to be acquired pursuant to the clearance:
29: Commission may require person to supply information or documents or give evidence
Section 98
2: For the purposes of subsection (1) Increasing penalties
30: Offences
1: Section 103
4: A person who contravenes subsection (1), (2), or (3) commits an offence and is liable on conviction to,—
a: in the case of an individual, a fine not exceeding $100,000:
b: in any other case, a fine not exceeding $300,000.
2: Section 103(5) 6 months 3 years Regulations
31: Regulations
1: Section 108
ca: authorising the Commission, in its discretion or on any grounds that are prescribed, to refund any part of a prescribed fee paid by a person in connection with an application under Part 5 for an authorisation or a clearance:
2: Section 108(cc) and (cd) or 65A application under section 58
2: Other amendments
32: Consequential and minor amendments to principal Act
1: The principal Act is amended as set out in Schedule 1
2: By way of explanation—
a: the amendments in Part 1 of Schedule 1 Part 1
b: the amendments made in Part 2 of Schedule 1
c: the amendments made in Part 3 of Schedule 1
d: the amendments made in Part 4 of Schedule 1
33: Amendments to Shipping Act 1987
1: This section amends the Shipping Act 1987
2: In section 2 direction unfair practice
3: Repeal Parts 1 3 2019-08-14 Shipping Act 1987 refer section 2(2)﻿(b): sections 33 and 34 come into force on the day that is 2 years after the date on which this Act receives the Royal assent.
34: Consequential amendment to principal Act as result of amendments to Shipping Act 1987
Section 44(2) and (3) 2019-08-14 Commerce Act 1986
35: Consequential amendment to Civil Aviation Act 1990
Section 91(1) sections 27 to 29 sections 27 to 30 2017-08-15 Civil Aviation Act 1990
36: New Schedule 1AA inserted
Insert the Schedule 1AA set out in Schedule 2