In these extraordinary and challenging circumstances, the escalation of the response to COVID-19 has raised questions about how competition and consumer laws apply. The Commerce Commission has given some comfort for businesses offering essential goods and services that competition law will not decline legitimate and necessary collaboration, stating that “no New Zealand business should feel constrained from doing the right thing for their customers, the safety of their staff and New Zealanders” and showing that it will take a pragmatic strategy to enforcement.
Although, this does not mean that the Commerce Commission will not enforce the law if businesses engage in anti-competitive and unauthorized behaviour or engage in misleading conduct. Businesses and consumers are dealing with unprecedented difficulties, and bespoke solutions to resolve consumer matters are likely to be required.
How Commerce Commission enforces the law in COVID-19?
The Government of New Zealand has asked the Commerce Commission to take account of the exceptional circumstances created by current pandemic when monitoring business behaviour in coming weeks. The overall message from the Government is that now is not the time for strict competition rules to get in the way of common sense and legitimate collaboration as businesses in essential goods and services respond to COVID-19.
The Government’s announcement does not override the Commerce Commission’s statutory powers or independence. Even so, the Commission has responded by saying that it has no intention of taking enforcement action under the Commerce Act against businesses who are cooperating to ensure New Zealanders continue to be supplied with vital goods and services during this exceptional time. Such cooperation may require working with competitors to share staff or distribution networks, or follow measures to verify security of supply.
However, we expect that the Commission will continue to strictly enforce the law if businesses engage in unauthorised collusion and mislead consumers. This includes, for instance:
Fixing prices or allocating markets
Engaging in other anti-competitive behaviour or Colluding with competitors that is not vital to ensure that New Zealanders continue to be supplied necssary goods and services. The Commerce Act allows for some collaborative activities, and for conduct to be authorised by the Commission on public benefit grounds. For instance, the Australian competition regulator has granted urgent interim authorisation for supermarkets in Australia to engage in coordinated activities with the broad purpose of ensuring the supply and fair, equitable distribution of certain retail products to consumers during the COVID-19 pandemic. Businesses should continue to seek legal advice before entering into arrangements with competitors.
Engaging in misleading and deceptive conduct
For instance, the United Kingdom’s Advertising Standards Authority recently published two rulings regarding advertisements for face masks which claimed that they could protect wearers against current pandemic infection. Those claims were released as misleading because they were not backed by clinical evidence. New Zealand’s regulators are in same way likely to act promptly against businesses who get to exploit the outbreak and make misleading and unsubstantiated claims to sell services or products.
The Commerce Commission has shared that it will release more guidance on its platform in the coming days. Businesses will also require being vigilant about the fact that any arrangements that are entered into to respond to the pandemic must leave after the pandemic if they are not compliant with the Commerce Act.
