First published in NZ Lawyer, 1 June 2012.
After nearly four years on the Parliamentary Order Paper, the Commerce Commission (International Co-operation, and Fees) Bill is finally inching across the finishing line. Having recently survived its second reading, it was, at the time of writing, before the Committee of the Whole House. Once passed, the Bill will empower much greater investigatory co-ordination between the Commerce Commission (the Commission) and foreign antitrust agencies such as the Australian Competition and Consumer Commission (ACCC).
Due to a busy legislative agenda, the Bill has taken longer than expected to progress. The Trans-Tasman Outcomes Implementation Group, set up by the New Zealand and Australian Prime Ministers to monitor progress towards business law harmonisation, noted in its six-monthly report in February 2012 that the Bill had been delayed. Australia passed corresponding legislation in 2007.
The Bill was introduced to the House by then Minister of Commerce Lianne Dalziel in September 2008, and has since enjoyed a fair degree of cross-party support. Although progress stalled after the Commerce Select Committee reported on the Bill in November 2010, at the beginning of this month the Bill passed its second reading under the guidance of the current Minister of Commerce, Craig Foss.
Once through the Committee of the Whole House (where it will be divided into four bills separately amending the Commerce Act 1986, Credit Contracts and Consumer Finance Act 2003, Fair Trading Act 1986, and Telecommunications Act 2001), the Bill will progress to its third reading. The Governor-General will then be asked to sign the amendments into law.
What changes are being made?
The purpose of the Bill is to introduce a new regime enabling the Commission to assist, and be assisted by, equivalent overseas regulators such as the ACCC, recognising the cross-border nature of much modern commerce. The Bill seeks to achieve that objective by making largely identical amendments to the four statutes noted above (the focus of this article is on the changes to be made to the Commerce Act). Those amendments contemplate the Commission and overseas regulators exchanging information about suspected anti-competitive conduct, including information acquired compulsorily using statutory powers such as those in section 98.
Before information can be shared, the regulators must enter into and publish a "co-operation arrangement". Such an arrangement can be reached between governments, or between regulators subject to the approval of the Minister of Commerce. In either case, the Minister must not approve an arrangement without having regard to several protective considerations, including the legal framework relating to the use of the information in the overseas regulator's jurisdiction, the potential consequences for New Zealand consumers and businesses of providing assistance to the overseas regulator, and New Zealand's international obligations. Significantly, the arrangement must set out how the information provided may be used by the overseas regulator and how it will be kept secure. The Commission is already party to agreements with regulators in Australia, Canada, Taiwan and Canada: the Bill seems to contemplate that those agreements will be brought into line with the Bill's requirements.
Once a co-operation arrangement is in place, one regulator may request the other to assist. Although the Government has emphasised that it expects there to be reciprocity between regulators, the Bill focuses heavily on requests made to the Commission by an overseas regulator (rather than vice versa). In response to such an incoming request, the Commission may:
"provide compulsorily acquired information" to the overseas regulator. This means information already acquired by the Commission under its statutory powers in sections 98, 98A or 98H of the Commerce Act. It extends to information acquired before the amendments come into force, but does not capture information that was not compulsorily acquired by the Commission, or was provided to it by consent such as by way of a leniency application;
"provide investigative assistance" to the overseas regulator by exercising its powers under sections 98, 98A or 98H.
Before providing such assistance, the Commission must consider certain factors including whether providing the information will help the overseas regulator to perform its competition law functions, whether complying with the request will affect the Commission's ability to perform its own functions, and whether the overseas regulator could obtain the information from other sources. There is no requirement that the Commission advise or consult with affected parties before complying with such a request.
The Commission does, however, have the power to impose conditions on information which it decides to disclose to an overseas regulator. In particular, it may seek to impose conditions that relate to maintaining confidentiality, or the use to which the information is put. One important restriction relates to statements made by a person in answer to questions that might tend to incriminate that person in the overseas jurisdiction. The Commission may only provide copies of such statements if the overseas regulator gives a written undertaking that it will not use them in criminal or quasi-criminal proceedings against the person.
As soon as practicable after providing information to an overseas regulator, the Commission must notify the person from whom the information was acquired, and any person to whom it relates (unless to do so might compromise an investigation, or otherwise prejudice enforcement efforts). This may be the first point at which such a person becomes aware that its information has been requested by an overseas regulator. That person might then be able to persuade the Commission to seek to impose conditions on information it has already provided to an overseas regulator, but there is an obvious risk that it will prove impossible to ‘put the toothpaste back in the tube'.
A delicate balance
The policy behind establishing a statutory basis for international co-operation between regulators is clear, but the application of that policy will involve a delicate balance in practice. The Bill does not provide for the owners of information to influence the way in which it is shared with other regulators. That may make those parties more cautious about providing information to the Commission, and encourage them to seek to place restrictions around the use of such information ex ante. For the Commission, there will be a balance to be struck between the desirability of assisting overseas regulators (and receiving their assistance) and the undesirable risk that the prospect of information being shared with overseas regulators discourages parties from co-operating with the Commission. This is an area where clear published guidelines explaining how the Commission will approach information sharing, and protect the legitimate interests of the information providers, are necessary.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.