The Economic Development, Science and Innovation Committee (the Committee) has reported back on the Commerce (Promoting Competition and Other Matters) Amendment Bill (the Bill), recommending by majority that it be passed with several amendments. The Committee’s report marks the next step in one of the most significant proposed reforms to New Zealand competition law in recent years.

In our previous alert we outlined the key changes in the Bill. This alert outlines the Officials’ and Committee’s views in response to submissions and what to expect as the Bill proceeds to its second and third reading. 

Who submitted, and on what?

The Committee received 80 written submissions and heard from 21 submitters in person (our submission on the Bill is available here). Most submitters supported the Bill's aims, but several proposed amendments attracted substantive debate including: predatory pricing; the repeal of section 46; behavioural undertakings; the substantial lessening of competition (SLC) test; and the three-year lookback for serial acquisitions.

Officials from the Ministry of Business, Innovation and Employment (MBIE) (Officials) prepared a detailed report to the Committee, which included recommendations on each issue. We have set out below, for each key issue, what Officials recommended and what the Committee ultimately decided in the final Select Committee report (Final Report).

What has changed?

Officials considered submissions and provided recommendations that were largely incorporated by the Committee into the Final Report. 

• Section 46 (Saving in respect of business acquisitions) to remain: Submissions were consistently opposed to the proposed repeal of section 46, arguing that doing so would expose ordinary merger activity to Part 2 scrutiny, chilling legitimate commercial activity. Section 46 operates as an important safeguard that excludes arrangements for the acquisition or disposition of business assets or shares from the prohibitions in Part 2 of the Commerce Act 1989 (the Act) (such as the cartel prohibition and misuse of market power prohibition). Officials recommended retaining section 46 to preserve the bright line that acquisitions are assessed under the merger regime, while avoiding parallel Part 2 exposure.

  • What was decided: The Committee recommended retaining the existing section 46. 

• SLC test clarification limited to the merger regime: The original Bill proposed extending the SLC test to cover conduct that creates, strengthens, or entrenches market power across the whole Act. In our earlier alert we raised concerns that this was unnecessary and risked chilling pro-competitive commercial behaviour, including price-matching and investment decisions. We noted that the equivalent change in Australia had been limited to the merger context for the same reasons. Officials agreed, concluding that applying this clarification across the Act could create uncertainty about legitimate competitive conduct, including investment, innovation, and other pro-competitive responses that may incidentally strengthen a firm's market position. Officials recommended limiting the clarification to the merger regime only.

  • What was decided: The Committee recommended limiting the clarification that substantially lessening competition may include "creating, strengthening, or entrenching a substantial degree of market power" to the merger regime only, that is, to existing sections 47, 47A, 66, and 67 of the Act. This aligns New Zealand's approach with Australia and avoids the uncertainty that broader application would have introduced.

• Reinstatement of the "of a business" qualifier in the merger prohibition: The current merger prohibition applies to acquisitions of shares or assets of a business. The original Bill proposed removing the “of a business” qualifier which was intended to address uncertainty about whether some acquisitions of assets (such as machinery, licences, quotas, regulatory rights, or undeveloped land) are captured by section 47 where those assets are not clearly part of an existing business. However, due to the recommended retention of section 46 discussed above, officials recommended reinstating the qualifier to ensure that ordinary course acquisitions of stock and inventory remain within the scope of Part 2 of the Act.

  • What was decided: The Committee recommended that section 47 continue to only apply to acquisitions of assets of a business or shares. 

• Behavioural undertakings threshold replaced: The original Bill proposed to enable the Commerce Commission, when giving a clearance or granting an authorisation for proposed acquisitions, to accept commitments (“behavioural undertakings”) from an acquirer about its post-merger conduct, bringing New Zealand in line with other jurisdictions. Officials agreed with submissions that the threshold in the Bill, which required the Commission to be satisfied that a structural remedy was insufficient, was too restrictive, and recommended replacing it with a more proportionate and practicable standard. Despite submitters suggesting that the Court should also have the power to accept behavioural undertakings, Officials did not recommend making this change.

  • What was decided: The Committee has recommended amending the Bill to allow the Commission to accept behavioural undertakings if a structural undertaking (i.e. a divestment) would cause costs out of all proportion to the effects it would address or is otherwise not reasonably practicable. This goes some way to addressing the concerns raised by submitters about the approach in the original Bill, but remains a more restricted approach than that adopted in Australia.

• Suspension and call-in powers tightened but retained: The original Bill proposed granting the Commission suspensory powers for proposed and completed transactions including the power to suspend acquisitions for up to 40 working days where it has ‘reasonable grounds to believe’ that this is necessary to protect competition. In our earlier alert we flagged the significant discretion involved, the open-ended nature of the safeguarding obligation, and the effective reversal of the onus of proof created by the call-in power. Officials supported the new tools in principle but recommended tightening the thresholds and clarifying the consequences of non-compliance with safeguarding directions from the Commission.

  • What was decided: The Committee has retained the proposed suspension and call-in powers but recommended minor amendments. In particular, where the Commission issues a suspension notice, the recipient is required to “take reasonable steps” to safeguard the business and its assets. The notice may specify those steps, and a court must have regard to the extent of compliance with them in any enforcement proceedings. This is a welcome amendment as it recognises that the acquirer is best placed to determine the steps required to safeguard the assets or business. The Committee has also amended the threshold for the proposed call-in power, so that the Commission must have reasonable grounds to believe that the proposed acquisition "may breach section 47" before exercising that power.

• Lookback provisions: The original Bill proposed a three-year lookback enabling the Commission to assess patterns of serial acquisitions over time. The original Bill applied this more broadly than the Australian equivalent, prompting concern from submitters that it would chill legitimate M&A activity and create legal uncertainty across unrelated markets. Officials recommended narrowing the lookback to prior acquisitions involving the same, substitutable, or otherwise competitive goods or services, rather than all prior acquisitions, to better target the risk of creeping acquisitions while reducing compliance costs and aligning with Australia.

  • What was decided: The Committee adopted Officials' recommendation to limit the lookback to prior acquisitions involving the same, substitutable, or otherwise competitive goods or services within the relevant three-year period.

• Confidentiality provisions duration reduced from 10 to 5 years: The original Bill included new protections for confidential information given to the Commission, and extended the maximum period that confidentiality orders could last to up to 10 years from when the Commission makes its final decision on the relevant application, or concludes the relevant investigation or inquiry. Officials recommended shortening this maximum to 5 years and requiring the Commission to weigh up proportionality and public interest before making orders that last beyond the end of a matter.

  • What was decided: The Committee agreed with Officials. Confidentiality orders under section 100 are now proposed to be limited to a maximum of 5 years after the relevant decision is made or the investigation or inquiry concludes. The initial confidentiality period under section 100AA is also reduced to 5 years from when the information was provided, with any further extensions allowed only in blocks of up to 5 years at a time. Before making a confidentiality order that lasts beyond the end of an investigation or decision, the Commission must consider whether the duration is appropriate, taking into account the risk of harm from disclosure and the importance of transparency, accountability, and public trust.

• Statutory notification regime amended: The original Bill introduced a statutory notification regime allowing businesses to proceed with certain categories of conduct that are likely to be in the public interest or are unlikely to substantially lessen competition after notifying the Commission, unless the Commission objects. Officials and the Committee agreed on several targeted refinements.

  • What was decided: The Committee’s key change is to clarify that the class exemption power enables the Commission to proactively exempt categories of businesses or transactions from the competition rules in the Act. This will allow the Commission to consider making a class exemption for small-scale acquisitions that are unlikely to raise competition concerns, which would be a welcome and overdue step.

Where the Final Report differed from Officials’ recommendations

A significant instance where the Committee did not adopt the Officials’ recommendations is in respect of the proposed predatory pricing prohibition.

The original Bill proposed a new predatory pricing prohibition. Under the proposed rule, a person with substantial market power would automatically be treated as misusing that power if, for a sustained period, it prices below Average Variable Cost or Average Avoidable Cost. Pricing above those thresholds but below Long-run Average Incremental Cost or Average Total Cost will also constitute misuse of market power if the pricing has an exclusionary purpose. Short-term pricing (three months or less in a 12-month period) is excluded from the definition of predatory pricing, but "sustained period" is not defined. Submitters raised significant concerns about the proposal, including the lack of clear definitions, the compliance burden it would impose, and the risk of chilling legitimate competitive pricing. Officials agreed, recommending that the provision be deleted entirely and that predatory pricing continue to be dealt with under the existing misuse of market power framework, supported by updated Commission guidance. 

The Final Report does not discuss the Officials’ recommendation to remove the prohibition from the Bill but records that the Labour Party and the Greens did not support its removal. It has therefore been retained in the Bill which the Committee has recommended be passed.

What remains unchanged?

Several provisions in the Bill that we discussed in our earlier alert have passed through the Select Committee process without material amendment and are proceeding as introduced.

• Streamlined collaborative activity clearance process: New sections 65BA to 65BC introduce an additional clearance pathway under which the Commission may grant a clearance if it is satisfied that the arrangement is a collaborative activity and that the relevant cartel provisions are reasonably necessary for that collaboration. Applications under the new pathway are subject to a 30-working-day statutory timeframe, with a deemed decline if no decision is made within that period. This is an additional option and does not replace the existing clearance process.

• Substantial degree of influence factors: New section 47(5) introduces a non-exhaustive list of factors relevant to determining whether a person can exert a substantial degree of influence over the activities of another, for the purposes of the business acquisition prohibition. The factors include voting rights, board appointment rights, veto powers, economic dependency, and contractual or informal arrangements. This provides greater clarity for parties assessing whether associated persons of an acquirer may bring a proposed transaction within the scope of section 47.

When will these changes come into force?

The commencement framework is substantially unchanged from the Bill as introduced. The Bill's general commencement is the day after Royal Assent. A specified set of provisions will come into force 6 months after Royal Assent, including the Commission's suspension and call-in powers, the SLC test clarification for the merger regime, and the serial acquisitions lookback.

What’s next?

The Committee recommends by majority that the Bill be passed. The Bill will now proceed to its second and third readings in the House before receiving Royal Assent. The Government's stated intention is to pass the Bill by mid-2026.

MinterEllisonRuddWatts will continue to monitor developments as the Bill progresses through its remaining stages. If you have any questions about how these changes may apply, or concerns about their impact on your business, please speak to one of our competition law experts.

This article was co-authored by Sian Vaughan-Jones (Solicitor), in our Corporate team.