Competition law developments overseas can influence domestic thinking and trends. Two noteworthy recent international competition law developments are:
- The EC’s new vertical agreement exemptions and guidelines – What lessons can we take in applying NZ competition law to vertical agreements?
- The new chair of the ACCC’s speech on international collaboration of competition regulators – To what extent does the NZCC share the ACCC’s challenges and enforcement priorities?
EC new VBER and vertical guidelines
The European Commission (EC) has adopted new Vertical Block Exemption Regulation (‘VBER’) accompanied by the new Vertical Guidelines which enter into force on 1 June 2022.
The VBER creates an exemption from the prohibition in Article 101(1) of the TFEU against anticompetitive agreements for agreements between companies that are active at different levels of the production or distribution chain. It therefore provides a safe harbour where certain agreements are block exempted.
New Zealand’s prohibition against anticompetitive agreements does not have safe harbours. But the EC’s guidance is useful for indicating what types of agreement the EC views as having a low risk of being anticompetitive and, given the new VBER, how its views have changed. For example the new VBER:
- continues to have a 30% market share threshold. The VBER applies to vertical agreements where the supplier and buyer each have market shares that do not exceed 30% and which do not contain specified “hardcore restrictions” of competition.
- narrows the exemption for dual distribution, including excluding from the exemption information exchange which is not directly related to implementation of the vertical agreement and excluding from the exemption vertical agreements relating to online intermediation services (eg online platforms) when the platform provider also sells goods or services in competition with firms that use its platform.
- narrows the exemption for parity obligations (eg most favoured nation clauses (MFNs) where the seller promises the customer, that if the seller supplies another customer on better terms, it will supply this customer on those same better terms). MFNs are generally exempted but across-platform retail MFNs (“wide MFNs”) are now excluded from the exemption.
- exempts dual pricing. Dual pricing is when a distributor is charged a higher wholesale price for products intended to be sold online. Under the new VBER, suppliers may set different wholesale prices for online and offline sales as this may incentivise or award investment in a particular sales channel, subject to certain safeguards.
Many of these changes relate to online sales and platforms, reflecting the ever-evolving thinking as new technology creates new market dynamics.
New Zealand’s cartel regime also has an exception for vertical supply contracts. This law was only introduced in 2017 and so this exception remains relatively untested.
The UK Competition and Markets Authority (CMA) also consulted on draft guidance to accompany the UK Vertical Agreements Block Exemption Order (VABEO) and is now analysing the feedback received.
ACCC speech on international co-operation
On 4 May 2022, the new Chair of the Australian Competition & Consumer Commission (ACCC) spoke about the importance of international collaboration between competition regulators in a Keynote address at the ICC/IBA Pre-International Competition Network Forum. Some key takeaways are:
- The continued international attention on digital platforms.
- The ACCC developed the news media bargaining code regarding negotiations between digital platforms and Australian news media businesses. In New Zealand, the NZCC is considering an authorisation application for New Zealand news media businesses to collectively bargain with digital platforms.
- The ACCC is also conducting a digital platform services inquiry under which it will produce interim reports every six months until a final report on 31 March 2025. The interim reports so far have covered online private messaging services and search and social media platforms, distribution of apps and app marketplaces, provision of web browsers and general search services and provision of general online marketplaces. A fifth interim report due 30 September 2022 marks the mid-point of the inquiry and will consider issues identified to date and whether Australia’s current competition and consumer protection laws are sufficient to address these issues and options for regulatory reform.
- Collaboration and information sharing between international regulators on global mergers.
- For example for the proposed Cargotec/Konecranes merger, the ACCC, UK CMA, US Department of Justice (DOJ), EC and New Zealand Commerce Commission (NZCC) collaborated closely and shared information which helped inform the ACCC’s analysis and the direction of its review. The parties ultimately cancelled the planned merger, withdrawing clearance applications in Australia and New Zealand, after the UK CMA blocked the proposed merger.
- Other merger clearance applications currently under consideration in both New Zealand and Australia are Sika AG/MBCC Group, THL Group (Australia) Pty Ltd/Apollo Tourism & Leisure Ltd, and Zoetis Australia Research and Manufacturing Pty Ltd/Betrola Pty Ltd.
- The ACCC increasingly faces practical challenges “with merger parties pushing the boundaries of the informal system” prompting it to consider whether its public informal merger review regime remains fit for purpose.
- Australia does not have a mandatory merger notification regime and instead relies on merger parties voluntarily notifying the ACCC and providing sufficient time and information for the ACCC to conduct its review.
- New Zealand also has a voluntary, not mandatory, merger notification regime. The ACCC chair’s speech raises the question whether the NZCC also faces the same difficulties. Unlike the ACCC however, which has a public informal merger review process, the NZCC has a formal clearance process with a statutory framework.
- The ACCC chair identified global supply chains and financial services as two enforcement priorities most relevant to the theme of global cooperation between agencies.
- On global supply chains, the NZCC also had a media release in February 2022 announcing it is working with the ACCC, Canadian Competition Bureau, UK CMA and US DOJ to help detect and investigate potential cartel conduct arising from disruption in global supply chains.
- On financial services, the NZCC has not yet identified this as an enforcement priority. However the new Retail Payment Systems Act 2022 was recently passed on 13 May 2022, under which the NZCC will monitor the retail payment system, and regulate designated retail payment networks. This is a new area of responsibility for the NZCC. It announced the Mastercard and Visa credit and debit card networks will be its initial focus of its work to promote competition and efficiency in the retail payment system.
- The ACCC has also issued proceedings against Mastercard for alleged misuse of market power regarding the supply of debit card acceptance services.