The Commerce Commission has today issued new guidance to help businesses understand how and when they can collaborate in response to an emergency – such as working together in regions impacted by Cyclone Gabrielle.
“It’s been devastating to see what’s happened in Northland, Auckland, Tairāwhiti Gisborne and Hawke’s Bay with the extreme weather events this year, and in these emergency situations businesses may need to collaborate in response to the emergency,” said Dr John Small, Chair of the Commerce Commission.
In releasing the Business collaboration in response to an emergency guidance, Dr Small says the Commission wants to ensure businesses have simple and clear information about how they can work together to maintain the supply of goods and services during an emergency situation.
Dr Small says competition benefits consumers even in times of crisis. However, the Commission is equally conscious of concerns that uncertainty over competition law enforcement could impede necessary co-operation in an emergency situation.
The guidance sets out the factors that the Commission will take into account when considering approaches from businesses who want to collaborate in response to an emergency.
“It is important that New Zealanders continue to have confidence in markets and that consumers continue to experience the benefits of competition,” Dr Small says.
“Competition encourages businesses to offer lower prices, better services and higher quality goods, as well as incentivising businesses to innovate and improve efficiency.”
“Therefore, this guidance will apply only in response to a genuine emergency: where a State of Emergency is in effect, or where the Commission otherwise advises that the situation warrants it. The Commission will not tolerate collaborations that have the purpose of profiteering or otherwise taking advantage of an emergency for commercial gain.”
Dr Small says the guidance emphasises the need for business to think carefully about the duration and nature of any collaboration and encouraged businesses to reach out to the Commission early if they think they will need to collaborate in the event of an emergency.
He said the Commission will also be reaching out to procurers in the public and private sectors to talk with them about competition issues, including cartel conduct and how to spot it.
Cartel conduct harms consumers by preventing businesses from competing to provide better quality services at better prices, and it harms businesses that are trying to compete fairly.
In March 2020, the Commission announced its approach to cooperation between businesses for the provision of essential goods and services in response to the COVID-19 pandemic. It noted that it had no intention of taking enforcement action under the Commerce Act against businesses who are cooperating to ensure New Zealanders continue to be supplied with essential goods and services during that time.
In May 2020, the Commission issued guidance on how it would assess business collaborations that were being entered into in a response to COVID-19.
The Commission had a number of approaches from businesses wishing to collaborate to ensure the provision of essential goods and services. The Commission’s experience during the COVID-19 period was that businesses that approached it about collaboration were concerned about whether the Commission might consider it to be cartel conduct.
This guidance has now been updated to apply to emergency situations more generally.
The guidance has also been broadened to include essential and non-essential goods and services and encourages businesses to engage with us if they are contemplating collaboration with competitors.
Click here for the Business collaboration in response to an emergency guidance.