ComCom declines interim authorisation for banks to collectively negotiate
The Commission has declined New Zealand Banking Association’s application for interim authorisation for it, a group of banks and other parties including major retailers, to collectively negotiate with Evergreen International LLC (Armourguard) over cash-in-transit services.
The Commission has declined New Zealand Banking Association’s application for interim authorisation for it, a group of banks and other parties including major retailers, to collectively negotiate with Evergreen International LLC (Armourguard) over cash-in-transit services.
The Commission is continuing to consider NZBA’s application for full authorisation and the decision on interim authorisation in this case should not be taken to indicate that the Commission will or will not grant the full requested authorisation.
However, NZBA also applied for interim authorisation to allow it and the other parties to collectively negotiate extensions to their existing contracts with Armourguard and to undertake preparatory work and commence collectively bargaining with Armourguard for new agreements, including sharing information with each other (but not entering into any collectively bargained agreement until full authorisation is granted), while the Commission considers its authorisation application.
As was required by the circumstances, the Commission considered NZBA’s application for interim authorisation quickly, with a view to making a decision in a short time period to resolve uncertainties for all parties prior to our final decision on full authorisation.
Two of the three Commissioners who considered the interim application, Chair Dr John Small and Commissioner Bryan Chapple, were not satisfied that it is appropriate to grant interim authorisation.
“All Commissioners agreed that this was a finely balanced decision. However, on the information provided the majority of Commissioners are not satisfied that the potential benefits of permitting collective bargaining would outweigh the potential detriments” Dr Small says.
The Commission, informed by submissions, analysed a wide range of possible public benefits and detriments, including those arising from effects on the usage of cash-in-transit services, the sharing of information and the timing of investment.
“Ultimately, the majority of Commissioners were not satisfied that the potential benefits outweighed the potential detriment that may result from the arrangement, so we have declined interim authorisation,” Dr Small says
Associate Commissioner Nathan Strong dissented on the decision.
“Commissioner Strong’s dissenting view is that granting interim authorisation and allowing the participants to begin collective negotiations would preserve the potential for the benefits of collective negotiation to be realised should the Commission grant full authorisation, and that this outweighed the potential detriments of interim authorisation.” Dr Small says.
The Commission’s consideration of the full authorisation is continuing, with a draft determination to be released for consultation in due course. The Commission may still grant the full authorisation if it is satisfied that the conduct would have net public benefits.
A copy of the Commission’s written reasons for this decision will be available on the Commission’s case register within one week.
Background
The NZBA is an industry representative organisation that represents and advocates for the interests of the New Zealand banking industry.
Cash-in-transit (CIT) services include the transport, management and processing of bulk cash for banks, the public sector, financial institutions and retail customers, as well as the replenishment of ATMs and bulk cash storage and management.
CIT services are important for banks and retailers to manage their use of cash. In seeking authorisation, the NZBA asserts that the proposed collective negotiation will result in significant benefits, including improved sustainability of CIT services, reduced transaction costs, and enhanced financial inclusion and resilience. The NZBA also asserts that the proposed arrangement will not result in any public detriment.
In 2024, the Commission cleared the acquisition by Evergreen NZ Holdings (trading as Armourguard) of ACM New Zealand Limited (trading as Linfox Armaguard), on the basis that it was very likely that one of Armourguard or Linfox Armaguard would cease to operate without the acquisition. Armourguard is now the only New Zealand supplier of certain cash-in-transit services following its merger with ACM.
Interim authorisations
Interim authorisations have the same effect as full authorisations (described below), but are of limited duration and are only available while the Commission considers an application for authorisation of the relevant agreement or unilateral conduct. The agreement or conduct authorised on an interim basis cannot be challenged by the Commission or by a third party as being in breach of the relevant provisions of the Commerce Act, while the interim authorisation remains in force.
The Commission may grant interim authorisation where it considers it appropriate to allow the proposed agreement or unilateral conduct to be given effect to while due consideration is given to the application for authorisation; or for any other reason. Given the purpose of the Commerce Act and of the authorisation regime, the Commission is unlikely to grant interim authorisation in respect of an agreement or unilateral conduct that has the potential to lessen competition unless there are compelling reasons in the public interest to do so.
The Commission may grant an interim authorisation at any time during its consideration of the application for authorisation. However, the Commission is most likely to do so at or near the beginning of the authorisation process, or at the same time as making a draft determination on the application for which authorisation is sought. In this case, the Commission made a decision on NZBA’s application at this time, at NZBA’s request.
Authorisation requirements
Competition law recognises some agreements that lessen competition or contain cartel provisions may have public benefits that outweigh the detriments arising from the agreement.
In such cases, firms can voluntarily apply to the Commission for authorisation.
The Commission may grant authorisation under section 58 of the Commerce Act 1986 (the Act) for agreements that may otherwise breach the Act if it is satisfied that the agreement will in all the circumstances result, or be likely to result, in such a benefit to the public that the conduct should be permitted.
The Commission’s Authorisation Guidelines explain when anti-competitive agreements that may lessen competition will be authorised under section 58 of the Act, and our process for determining such authorisation applications. A copy of the guidelines can be found on the Commission’s website.