Shipping - Commerce Act to be applicable to international shipping

The Minister of Commerce has announced that international shipping is to be placed within the framework of the Commerce Act 1986 (Act). The change will be implemented via the Commerce (Cartels and Other Matters) Amendment Bill (Bill) currently before the Commerce Select Committee. It is expected that the Bill (once amended to implement these changes) will be enacted in 2013.

The Select Committee is due to report on 14 May 2013. The Committee has been asked to consider the repeal of s. 44(2) of the Act. This section presently exempts contracts or arrangements "in so far as they contain a provision exclusively for the carriage of goods by sea from a place in New Zealand to a place outside New Zealand” or vice versa, from the prohibitions contained in Part 2 of the Act, including the prohibition against hard core cartel conduct in s. 30. Further, it is intended that Part 1 of the Shipping Act 1987, which provides an alternative anti competition regime applicable to outwards shipping, will be repealed.

The Act promotes competition in markets for the long term benefit of consumers in New Zealand. Part 2 of the Act contains prohibitions on restrictive trade practices, such as arrangements that substantially lessen competition, including price-fixing, and practices taking advantage of market power for the purpose of restricting entry or eliminating a competitor.

It is intended that the Bill will contain a transitional period of at least a year to allow shipping lines to self assess whether their agreements are likely to comply with the Act and if not, to seek a clearance or authorisation from the Commerce Commission. Under section 58 of the Act, a person may apply for authorisation to confer Commerce Act immunity on certain agreements. Authorisation may only be granted if the Commerce Commission is satisfied that a benefit to the public would outweigh the lessening in competition that would result from granting the authorisation. The Commerce Commission will be asked to provide guidance, within six months from the enactment of the Bill, to interested parties on how the Act would apply to international shipping.

Whilst acknowledging that the benefits of the proposed regime cannot be quantified, in the Government's view these changes will improve oversight and deliver competitive outcomes for New Zealand's exporters. For more detail, see the Cabinet Papers here.

A review is also underway with respect to regulation of competition for international civil aviation services.

For further information contact Karl Stolberger or Barbara Versfelt

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