Photo source: Facebook, Andrew Bayly MP
The New Zealand government is initiating an “ambitious” review of the Commerce Act, a major step that could lead to stricter regulations on mergers and acquisitions.
The Ministry of Business, Innovation, and Employment (MBIE) has begun consultations to amend New Zealand’s competition law and provide the Commerce Commission with more power in its regulatory role.
It’s planning to take action against “creeping acquisitions.” These are small, incremental acquisitions made by companies that, while individually insignificant, can collectively reduce competition in the market.
Commerce and Consumer Affairs Minister Andrew Bayly provided the Herald with examples, such as large firms acquiring medical centres, veterinary clinics, and physiotherapy and dentistry businesses.
For Bayly, ComCom’s ability to evaluate merger or acquisition applications is limited, which means it cannot prevent a company from acquiring a competitor if that specific transaction does not, on its own, significantly impact market dynamics.
Bayly has expressed concern regarding these private equity firms engaging in aggressive acquisition strategies, where they buy multiple companies within specific sectors, consolidate them, and later sell them off as bundled entities.
MBIE is also consulting on a part of the Commerce Act that addresses how businesses communicate their pricing plans to competitors. They have received evidence that this happens, sometimes through intermediaries like industry associations that gather sensitive pricing information from members and publish market forecasts.
Bayly believes that the rules regarding this behaviour need to be updated.
While Bayly recognised that price signalling was an issue, he also acknowledged that the law sometimes prevents beneficial cooperation within certain sectors. He cited banks and telecommunications companies working together to combat financial scams as an example.
As part of the efforts to refine the Commerce Act, Bayly has appointed Dame Paula Rebstock, a former chairwoman of the Commerce Commission, to evaluate the commission’s organisational capacity and performance.
While Bayly expressed confidence in the current commission chairman, John Small, he emphasised the need for greater accountability within the agency to enhance its effectiveness.
Bayly plans to initiate changes to the Commerce Act next year, following the completion of MBIE’s consultation process.