Anytime NZ Limited seeks collaborative activity clearance for agreements with franchisees

The Commerce Commission has received an application from Anytime NZ Limited (Anytime NZ) seeking clearance under section 65A of the Commerce Act 1986 relating to proposed agreements with its franchisees.

The applicant is the New Zealand master franchisee for the global gym franchise Anytime Fitness. Currently 53 gyms operate as part of the Anytime Fitness franchise in New Zealand.

Anytime NZ proposes entering into arrangements with Anytime Fitness New Zealand franchisees that contain standardised pricing provisions. The agreements would allow the applicant to impose lower and upper limits on franchisees’ membership pricing. It considers that the standardised pricing provisions are or may be cartel provisions, but that they are reasonably necessary and do not substantially lessen competition.

A public version of the clearance application will be available shortly on the Commission’s case register.

The Commission is currently scheduled to make a decision on the application by 3 November 2021. However, this date may be extended.

Background

The Commission will give clearance to a prospective agreement containing a cartel provision if it is satisfied that:

  • the applicant and any other party to the proposed contract, arrangement, or understanding are or will be involved in a collaborative activity; and
  • every cartel provision in the contract, arrangement, or understanding is reasonably necessary for the purpose of the collaborative activity; and
  • entering into the contract or arrangement, or arriving at the understanding, or giving effect to any provision of the contract, arrangement, or understanding, will not have, or be likely to have, the effect of substantially lessening competition in a market.

To be engaged in a collaborative activity two or more parties must:

  • be carrying on an enterprise, venture, or other activity, in trade in cooperation; and
  • not be doing so for the dominant purpose of lessening competition between them (or any two of them).

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