It prohibits anti-competitive agreements between businesses such as agreements to fix prices or to carve up markets. It also makes it illegal for companies to abuse a dominant market position.
Consumers and businesses can end up paying higher prices or having reduced choice of goods or services as a result of such agreements.
The type of agreements that are illegal can involve two or more businesses colluding (coordinated conduct), or the actions of a single business or person (unilateral conduct).
What is illegal?
Coordinated conduct includes:
- Agreements that substantially lessen competition in a market
- Agreements that exclude or limit dealings with a rival
- Agreements that fix, maintain or control prices (also known as cartels).
Unilateral conduct includes:
- A person or business taking advantage of their dominant position in a market for an anti-competitive purpose
- A person or business specifying a minimum price at which its goods or services can be sold by another - this is called resale price maintenance.
What can the Commerce Commission do?
The Commission can investigate complaints or issues that come to its attention. If, as a result of an investigation, the Commission believes the Commerce Act has been breached we can take a range of actions. This might include educating a business about how to comply with the Act or issuing a warning, or we can prosecute a business or person in the High Court.
Read our Enforcement Response Guidelines for more information about the enforcement responses available to the Commission.
In the case of cartels, a cartel member can apply to the Commission for immunity or cooperation under the Commission's Cartel Leniency Policy. This means that the Commission will agree to take reduced action, or take no action at all, in exchange for that person providing information and cooperating with the investigation.
Are there exceptions?
A business may wish to argue that, though their conduct may be illegal, there are public benefits which would outweigh the potential harm from the loss of competition. They can apply for an authorisation. If the Commission, having considered the facts, grants an authorisation it will protect that business from court action under the Commerce Act, either by the Commission or private individuals.
Authorisation applications can be very complex, and some can take considerable time to decide. However, under certain criteria, a business can apply for a streamlined authorisation which can be dealt with more quickly.
The Commission appreciates advance notice of authorisation applications.
To help you understand how to avoid anti competitive practices, we have published a series of fact sheets.
Fact sheets are easy-to-understand summaries of essential information. Anti-competitive practices fact sheets include:
This fact sheet provides an overview of the types of agreements and behaviour that are exempt from the Commerce Act.
As bid rigging is generally carried out in secret, it can be very difficult to detect.
The risks of anti-competitive conduct such as bid rigging in procurement can be mitigated by designing tenders in a way that minimises the likelihood of collusion.
Resale price maintenance occurs when a supplier of goods enforces, or tries to enforce, a minimum price at which the reseller must on-sell those goods.
This fact sheet explains why certain goods and services are regulated under the Commerce Act.
Guidelines provide in-depth information about rules and practices relating to anti competitive behaviour. They include:
These guidelines set out the approach the Commerce Commission proposes to follow in relation to the application of the cease and desist order provisions contained in ss 74A to 74D of the Commerce Act.
Our Authorisation Guidelines explain when we will authorise mergers and agreements (transactions) under Part 5 of the Commerce Act 1986 and the processes we use in determining authorisation applications.
As some arrangements for the supply of uniforms might raise issues under the Commerce Act, the Commission has prepared these guidelines to allow all parties to be more informed.
Members of trade or industry associations are usually competitors. This means that care must be taken to ensure that associations and individual members do not engage in anti-competitive behaviour that may breach the Commerce Act.
The Commission is taking a proactive approach to encourage greater awareness of the benefits of competition and to encourage compliance with the Commerce Act in the construction sector.
Under the Commerce Act, certain agreements and mergers (together transactions) are prohibited as they can lead to anti-competitive outcomes, such as increased prices or lack of choice. However, the Commerce Act recognises that in some circumstances, an anti-competitive transaction may lead to sufficient public benefits that would outweigh the competitive harm.