Confidentiality is critical for those who supply commercially sensitive documents and information to the Commerce Commission. However, in an era of trans-Tasman and increasingly global economic integration, the Commerce Commission regularly perceives a need to share information with overseas competition regulators and, in turn, receive their co-operation in the fight against anti-competitive arrangements affecting markets in New Zealand. This need has given rise to the Commerce Commission (International Co-operation and Fees) Bill, which was introduced to Parliament last week. In this update we answer some basic questions about the Bill and its implications for New Zealand business.
What are the origins of the Bill?
The Bill has had a long gestation period (reflecting the complexity of the issues arising from co-operation with international regulators). A discussion paper on the topic was released by the Ministry of Economic Development in September 2004 and extensive consultation was undertaken.
Across the Tasman an amendment to the Trade Practices Act which permits the Australian Competition and Consumer Commission (ACCC) to share confidential information with overseas regulators came into effect in July 2007 (the Corporations (NZ Closer Economic Relations) and Other Legislation Amendment Act 2007).
What are the aims of the Bill?
The Bill proposes to allow the Commerce Commission to use its statutory powers to provide investigative assistance to overseas competition and consumer regulators and to provide compulsorily acquired information to overseas regulators, subject to specified safeguards and principles of reciprocity. The primary objective of the Bill is to facilitate increased cooperation between the Commerce Commission and the ACCC. It will also enable enhanced co-operation with other overseas regulators.
The Bill amends both the Commerce Act 1986 and the Fair Trading Act 1986. This update focuses on the amendments to the Commerce Act 1986.
Doesn't the Commerce Commision already share
Why is the Bill needed?
The Commerce Commission is party to a number of cooperation agreements which contemplate the sharing of information with overseas regulators and other types of co-operation (for example, New Zealand is a party to the Trade Practices Commission/New Zealand Commerce Commission Co-operation and Co-ordination Agreement 1994). However, the Commerce Commission cannot presently share information provided by third parties on a confidential basis. Similarly, the Commerce Commission is not permitted to use its information gathering powers to assist overseas regulators in relation to matters that do not affect markets in New Zealand.
What information is covered by the information sharing provisions of the Bill?
The Bill principally deals with sharing of information that is 'compulsorily acquired information'. In the competition law context, this means information that is not in the public domain and is acquired by the Commerce Commission using its powers under section 98 of the Commerce Act 1986. Among other things, section 98 permits the Commerce Commission to obtain documents and information where it considers it is necessary or desirable to do so in performance of its functions and to interview relevant parties.
Information which is provided to the Commerce Commission voluntarily (for example as part of an application for cartel leniency or an application for merger clearance) is not subject to the information sharing regime. As is common in other jurisdictions, the regime is limited to compulsorily acquired information because of concerns that it might otherwise act as a disincentive to those considering co-operation with the Commerce Commission (in particular those who might seek leniency by providing information about unlawful cartels).
How does the Bill work?
The Bill provides that the Commerce Commission can provide assistance and information compulsorily acquired to overseas regulators only if there is an applicable Governmental co-operation arrangement in place.
The Bill sets out particular matters to be taken into account before a co-operation arrangement is entered into. Before entering into a co-operation arrangement, the Minister of Commerce must:
- Have regard to the legal framework relating to the use of compulsorily acquired information in the overseas regulator's jurisdiction.
- Have regard to the potential consequences for New Zealand consumers and businesses of providing compulsorily acquired information and investigative assistance to the overseas regulator.
- Consult with the Privacy Commissioner on any privacy issues arising from the proposed co-operation arrangement.
The Bill also sets out a number of minimum requirements for the content of a co-operation arrangement. These include, among other things, setting out how any compulsorily acquired information that is provided may be used by the overseas regulator and how it is to be kept secure.
Following a request by an overseas regulator for information and/or assistance under a co-operation arrangement, it remains up to the Commerce Commission as to whether or not it will provide the information and/or assistance. However, before it does anything it must be satisfied that:
- Providing the information or assistance will, or is likely to, assist the regulator in performing its functions or exercising its powers in relation to competition law.
- The provision of the information or assistance will not be inconsistent with the co-operation agreement.
The Commerce Commission must also consider a range of other matters, including whether the overseas regulator could more conveniently obtain the information or assistance from another source.
The Commerce Commission must not provide to an overseas regulator any communication or information that is subject to section 57 of the Evidence Act 2006 (which relates to privilege in the context of settlement negotiations or mediation) unless all parties which have a claim of privilege agree.
How can the overseas regulator use the shared information?
The Commerce Commission may impose a range of conditions on the provision of information to an overseas regulator, including conditions relating to maintaining the confidentiality of the information and the storage, use of, and access to the information provided.
Importantly, the Commerce Commission must not provide statements made by any person in reply to a question asked by or before the Commerce Commission unless the overseas regulator has provided the Commerce Commission with a written undertaking that it will not use such statements as evidence in criminal proceedings or in proceedings for a pecuniary penalty. This restriction mirrors the restriction which applies to the Commerce Commission itself relating to the use of such statements under section 106(5) of the Commerce Act.
How will I know if my confidential information is being shared?
As a general rule, if compulsorily acquired information is to be shared with an overseas regulator, the Commerce Commission must tell the person who gave the information and every person to whom the information relates. However, this will not apply if disclosure will prejudice an investigation etc or where it is not practicable in the circumstances to give the notice.
Implications and next steps
If the Bill does become law in its current form it will be interesting to see whether there are changes in the Commerce Commission's approach to the use of section 98 notices. For example, in the merger area, the Commerce Commission obtains information both voluntarily and by the use of section 98 notices in circumstances where information is required in a short period of time or in a way which would otherwise breach confidentiality obligations to third parties. Currently, from a practical perspective, the method used is irrelevant to the party providing the information. However, under the Bill, any confidential information obtained under a section 98 notice will be liable to be shared with overseas regulators.
It is still very early days for this Bill with no first reading likely prior to the upcoming general election. If the tenor of submissions on the original 2004 discussion paper is anything to go by we would expect to see a number of parties opposing or seeking modification of the Bill during its journey through the House. The issue of practical remedies against overseas regulators who breach confidentiality obligations is likely to be a critical topic of discussion.
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