Webinar: Sustainability, competitor collaboration and the Commerce Act
Many businesses are considering initiatives to respond to climate change and other sustainability challenges in New Zealand which sometimes require widespread and collective efforts among competitors.
However, competitor collaboration has the potential to fall foul of the Commerce Act’s prohibitions on cartel conduct and agreements that substantially lessen competition. So how should advisors navigate this landscape?
On Tuesday 12 March, ILANZ Committee host, Sophie Meares, and Michael Tilley, Chief Legal Counsel – Competition at the Commerce Commission, presented on the Commission's Collaboration and Sustainability Guidelines.
Michael highlighted some practical guidance for advisors to help their businesses and industries achieve their sustainability goals while staying on the right side of the Commerce Act line.
Recorded Webinar: If you were unable to attend the live webinar, or would like to watch it again, please click here to watch the webinar on YouTube.
These were the remaining questions and answers in the Q&A:
How broad does the CC view the joint buying exemption in respect to cartel provisions given the conduct is still subject to the general comp test?
The exception is only available as a defence to price fixing and not other types of cartel conduct. It is also not an exception to the general prohibition in section 27. So, a joint buying group that went beyond collectively negotiating on price and reached an agreement to allocate customers or restrict output would not be covered by the exception and would be at risk of breaching section 30. Whether or not a joint buying agreement raises issues under section 27 is a case by case assessment, involving an assessment of the factors discussed in the presentation and which can be found in the CSGs at [43]. By way of example, a joint buying arrangement between a small number of market participant who collectively only purchased a small portion of the relevant total output would be less likely to result in a substantial lessening of competition. More information on the Commission’s approach to assessing the joint buying exception can be found in chapter 4 of our Competitor Collaboration Guidelines.
What do you think about 2 organisations getting together, to disclose climate change mitigation measures and reports, while they both ready to report under XRB standards.
It would depend what is being disclosed and agreed between the parties. Important considerations here will be whether they are competitors, whether they are discussing competitively sensitive information (and, if so, whether it is being appropriately protected), whether they are reaching agreement on things that affect competition between them (and, if so, the likely impact on that competition and competition in the industry more broadly).
Modern Slavery query: What about a situation where companies decided to collaborate over suppliers to check on their modern slavery compliance...if they were sharing public information but it resulted in various companies not using a supplier, would this be in breach of the CA?
It would depend on the circumstances of the particular case, but this sounds similar to the ‘green list’ discussed in the presentation and which appears on page 8 of the CSGs. Whether or not such a list is likely to breach the Act will depend on the particular facts of the case. If there is no agreement between the parties on how they will behave, then the conduct will not breach sections 27 or 30 of the Commerce Act. Note, however, that an agreement does not need to be formal or written – a ‘wink and a nod’ can be sufficient. The key is whether there is a consensus or ‘meeting of minds’ involving a commitment about how the parties will behave in future. The leading case on what constitutes an arrangement is the Supreme Court judgment in Lodge Real Estate Limited & Ors v Commerce Commission [2020] NZSC 25. See paras [50] to [58] of that judgment.
What would be some of the key distinguishing features of a cartel and collaborative behaviour or is it fact dependent/subjective?
Whether a joint activity between competitors benefits from the collaborative activities exception will depend on the facts of the particular case. For detailed guidance on when the exception (and other exceptions to cartel conduct) apply, please see the Commission’s Competitor Collaboration Guidelines (the collaborative activities exception is discussed in chapter 5).