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COVID-19: Commission Issues Guidance On Business Collaboration

The Commerce Commission has issued guidance on how it is assessing business collaborations that are being entered into in response to COVID-19.

Commission Chair Anna Rawlings said the guidance aims to provide clarity and certainty for businesses as they navigate an unprecedented commercial environment and for consumers who should expect to continue to experience the benefits of competition.

“The Commission acknowledged early on that the exceptional circumstances surrounding the COVID-19 pandemic may require businesses to collaborate to deal with the crisis and ensure security of supply of essential goods and services that are important to New Zealanders,” said Ms Rawlings.

“In acknowledging this, we were also mindful of the importance of maintaining competitive markets in New Zealand.”

It is important that consumers and businesses continue to have confidence in markets and that consumers continue to experience the benefits of competition. Competition generally encourages businesses to offer lower prices, better services and higher quality goods, as well as incentivising businesses to innovate and improve efficiency.

“We have previously stated that we have no intention of taking enforcement action against businesses that are cooperating to ensure New Zealanders continue to be supplied with essential goods and services during this unprecedented time,” said Ms Rawlings.

“However, we have also made it clear that this approach will not extend to an unscrupulous use of the COVID-19 pandemic to engage in non-essential collusion or anti-competitive behaviour.”

The Commission’s guidance sets out the factors that it will take into account when considering whether collaboration between businesses relates to essential goods or services or facilitating the supply of such goods or services.

These factors will inform the exercise of the Commission’s discretion on whether it investigates or takes enforcement action in relation to such conduct.

“Ultimately, we will assess each arrangement on a case-by-case basis, taking into account the current environment and the longer-term impact on competition from any collaboration,” said Ms Rawlings.

The guidance also provides advice to businesses affected by the COVID-19 pandemic that may be considering the possibility of collaborating to supply non-essential goods and services to consumers.

Further information on the Commission’s collaborative activity clearance regime and the authorisation process are also included in the guidance for arrangements where the public benefits may outweigh the competitive harm arising from the arrangement.

“We are committed to continuing our work towards making New Zealanders better off, therefore, our position will continue to evolve to reflect an evolving understanding of the many issues being faced by businesses as they seek to mitigate the effects of the pandemic and of the types of conduct that may be detrimental to consumers, said Ms Rawlings.

“A key focus of the Commission will be to ensure that markets continue to work as effectively as possible for New Zealand consumers as the country responds to the COVID-19 pandemic.”

The Commission also has a range of other guidance available on the COVID-19 page on its website including guidance on consumer rights and business obligations.

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