Guide to competition law for businesses and procurers

Anyone who runs a business in New Zealand must comply with the Commerce Act, which aims to promote competition in markets for the long-term benefit of consumers. 

Competitive markets help to keep prices down and ensure that the quality of goods and services remains high. Competition also ensures consumers have a range of choices, and firms have incentives to innovate, invest and operate efficiently. Anti-competitive behaviour can jeopardise all of this, as well as a company’s ability to win new customers.

It is important that businesses are aware of what they can and cannot do when talking to their competitors. The Commerce Act prohibits anti-competitive agreements between firms such as agreements to fix prices, allocate markets or restrict output.

In addition, it is important for purchasers, such as procurers, to be aware of the rules around anti-competitive conduct so they can help detect illegal behaviour, such as bid rigging. This form of collusive tendering occurs when there is a secret agreement among some or all of the bidders about who should win a bid. Such an agreement prevents open and effective competition and procurers are unlikely to achieve best value for money for their business, customers, and in some cases, taxpayers.

The Commission can take enforcement action against businesses and individuals who breach the Commerce Act and the court can impose significant penalties for breaches against both businesses and individuals.

Businesses should seek independent legal advice to ensure they are not at risk of breaching the Commerce Act.

Read our Competing fairly in business and Is your business at risk of breaking competition law? quick guides.

Take our quiz to test your knowledge here.

Watch our short videos below.

 

The videos and quick guides were initially prepared by the United Kingdom’s Competition and Markets Authority (CMA) and have been adapted for New Zealand law by the Commission.

Read more on business competition below.