Corporate Reporter 21 February 2018

WELCOME to Issue No. 50 of Corporate Reporter, Bell Gully's regular round-up of corporate and general commercial matters, designed to keep you informed on regulatory developments, legislation and cases of interest.

IN BRIEF Items in this issue include:

• Government puts cartel criminalisation back on the table,

• Judicial guidance on the application of the penalty doctrine in New Zealand,

• First tranche of AML/CFT Phase 2 regulations enacted,

• New guidance notes on trading conduct and conflict management for NZX Participants,

• New category of sensitive land for OIO approval proposed,

• Updated and new class exemptions for the FMC Act regime, and

• The latest media releases from the New Zealand Commerce Commission and the Australian Competition and Consumer Commission.

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CONTENTS

CAPITAL MARKETS

• Select Committee consults on the Financial Services Legislation Amendment Bill • New requirements for trans-Tasman mutual recognition offer regime in the pipeline • FMA releases Conduct Outcomes Report for 2017 • Applications for providing robo-advice to open soon • Refinements made to the investment company FMC Act designation notice • Class exemptions for assurance engagements of overseas custodians extended • Financial Advisers (Australian Licensees) Exemption Notice extended • Financial Advisers (Australian Qualified Advisers) Exemption Notice 2018 • Exemption granted for managers of ‘notional’ MISs • FMC Act class exemption for irrigation companies • NZX has published new guidance notes on trading conduct and conflict management for NZX Participants • NZX publishes latest gender diversity statistics for Main Board issuers • NZX releases submissions on its Listing Rules review discussion document

MERGERS & ACQUISITIONS

• New category of sensitive land for OIO approval proposed • Latest Takeovers Panel Code Word released

COMMERCIAL

• Judicial guidance on the application of the penalty doctrine in New Zealand • First tranche of AML/CFT Phase 2 regulations enacted • AML/CFT Guidance notes updated • Facilitating digital interactions in existing legislation • Agreement reached on CPTPP with signing in March 2018

COMPETITION AND CONSUMER LAW

• Government puts cartel criminalisation back on the table • The latest media releases from the New Zealand Commerce Commission • The latest media releases from the Australian Competition and Consumer Commission.

NEED MORE INFORMATION? For more information on any of the items in the Corporate Reporter, please contact your usual Bell Gully adviser or any member of Bell Gully’s Capital Markets, Commercial, M&A or Competition teams. Alternatively, you can contact the editor Diane Graham by email or call her on 64 9 916 8849.

Disclaimer This publication is intended to merely highlight issues and not to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. You should take legal advice before applying the information contained in this publication to specific issues or transactions.

© Bell Gully 2018

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CAPITAL MARKETS

Legislative developments

Select Committee consults on the Financial Services Legislation Amendment Bill The Economic Development, Science and Innovation Select Committee called for submissions on the Financial Services Legislation Amendment Bill at the end of last year. The closing date for submissions is 23 February, which leaves the committee with just over three months to consider submissions and report back to the House on 7 June 2018. Submissions made on the Bill will be available to view on Parliament’s website here once the committee has considered them, or once the committee has heard from a submitter. Further details on the submission process are available here.

The Bill creates a new regulatory regime for providing financial advice and other financial services. It will change the way financial advice on products, such as mortgages, investments, insurance, KiwiSaver funds and other bank products, is regulated by repealing the Financial Advisers Act 2008 and amending both the Financial Markets Conduct Act 2013 (FMC Act) and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPR Act). Once the Bill is enacted, the majority of the regulation for financial advice will sit within the FMC Act.

The Bill also addresses the misuse of the Financial Service Providers Register through amendments to the FSPR Act, and includes some other minor changes and improvements to the FMC Act to address issues that have emerged since the implementation of the FMC Act regime.

For further details on the key changes introduced by the Bill and the likely implementation timeline see our article in the December 2017 issue of Corporate Reporter here.

New requirements for trans-Tasman mutual recognition offer regime in the pipeline In December last year the Australian Treasury released a consultation on draft legislation which will implement new design and distribution obligations for entities that issue or distribute financial products to retail investors in Australia. The new obligations generally apply to offers of financial products that require disclosure under the Australian Corporations Act 2001 or which are exempt from such disclosure due to a mutual recognition scheme, such as ‘recognised offers’ of New Zealand products under the trans-Tasman mutual recognition regime. Certain offers will be exempted, including where the financial product is an ordinary share in a company (but not if the ordinary shares are convertible into preference shares or the company carries on a business of investment in financial products, interests in land or other investments and it invests funds raised from the public).

The design and distribution obligations are aimed at improving consumer protection by requiring issuers and distributors to determine the target market for their products, having regard for whether the product would generally meet the likely objectives, financial situations and needs of consumers in that market. They will also be required to select appropriate distribution channels for the identified target market.

The extension of the new regime to offers of financial products made under the trans-Tasman mutual recognition regime ensures that they are subjected to the same design and distribution rules that will apply to Australian-issued financial products.

Full details of the consultation are available here.

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Financial Markets Authority (FMA)

FMA releases Conduct Outcomes Report for 2017 The FMA has published its Conduct Outcomes Report for the calendar year 2017, setting out some of the key issues and actions taken by the regulator’s enforcement and supervision teams. The report also includes good practice suggestions for licensed financial service providers and touches on investors’ perception of provider conduct. A copy of the report is available here.

Applications for providing robo-advice to open soon In its latest FMA Update, the FMA has confirmed that it will open applications to provide digital advice on 22 February 2018. This follows the FMA’s announcement in October 2017 that it would accelerate the introduction of personalised digital (robo) advice by exercising its exemption power under the Financial Advisers Act 2008 (FAA) and its subsequent consultation on a draft Financial Advisers (Personalised Digital Advice) Exemption Notice (and accompanying documentation) that closed in December.

Providers of digital advice will need to apply to the FMA to be included in the list of providers able to rely on the proposed exemption. This list will be set out in Schedule 1 of the exemption notice. As part of the application process, providers will need to provide the FMA with information showing that their directors and senior managers meet good character requirements, and that the provider meets minimum standards demonstrating their capability and competency to provide the personalised digital advice service.

The proposed exemption will apply to personalised financial advice and investment planning services provided to retail clients through a digital advice service (without the direct involvement of any individual) for certain eligible products.

Reflecting the technology of its time, the FAA currently only accommodates the provision of personalised financial advice by an individual. Consequently, it effectively prohibits the provision of “robo-advice” – that is, financial advice generated through a computer program using automated algorithms tailored to an investor’s personal financial circumstances and goals.

Refinements made to the investment company FMC Act designation notice The FMA has made some changes to the Financial Markets Conduct (Shares in Investment Companies) Designation Notice 2017 which was enacted in May last year to designate certain shares in investment companies as managed investment products rather that ‘equity securities’ for the purposes of the Financial Markets Conduct Act 2013, and the company which issues them as a managed investment scheme.

The Financial Markets Conduct (Shares in Investment Companies) Designation Amendment Notice 2018 amends the class notice to exclude redeemable shares, and shares brought within the scope of the notice by constitutions permitting alternate director appointments, from the scope of shares to which the class notice applies.

The FMA information sheet on the class notice has also been updated to include these amendments.

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Class exemptions for assurance engagements of overseas custodians extended The FMA has extended two 2017 class exemptions that exempt certain overseas custodians which conduct assurance engagement in the country where they are based from having to obtain assurance engagement from a New Zealand qualified auditor.

The Financial Markets Conduct (Overseas Custodians—Assurance Engagement) Exemption Notice 2018 continues the policy (until September 2022) in the Financial Markets Conduct (Overseas Custodians—Assurance Engagement) Exemption Notice 2017 which recognised certain overseas auditors for the purposes of the annual assurance engagement requirements that apply to overseas custodians of registered schemes under the Financial Markets Conduct Regulations 2014.

The corresponding exemption in the Financial Advisers (Overseas Custodians – Assurance Engagement) Exemption Notice 2017 that applied to overseas custodians assurance engagement requirements under the Financial Advisers (Custodians of FMCA Financial Products) Regulations 2014 has also been extended by the Financial Advisers (Overseas Custodians—Assurance Engagement) Exemption Notice 2018. This notice continues the policy of the 2017 exemption until February 2021.

Switzerland and the Netherlands have been added as recognised overseas jurisdictions in both of the 2018 exemption notices. The other jurisdictions are: Australia, Canada, France, Luxembourg, Switzerland, The Netherlands, the United Kingdom and the United States of America.

Financial Advisers (Australian Licensees) Exemption Notice extended The exemption for certain Australian-regulated financial services firms (Australian licensees) and their representatives provided in the Financial Advisers (Australian Licensees) Exemption Notice 2011 has been extended until 31 May 2021 by the Financial Advisers (Australian Licensees) Exemption Amendment Notice 2018.

The 2011 notice provides exemptions from certain provisions of the Financial Advisers Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008 to enable Australian licensees and their representatives to provide financial adviser services into New Zealand on an off-shore basis without obtaining authorisation as a New Zealand authorised financial adviser. The exemptions are subject to a number of conditions, including requirements that the Australian licensees be a registered financial service provider in New Zealand and a member of a New Zealand dispute resolution scheme. Australian licensees must also notify the FMA of their intention to rely on the notice and submit certain prescribed information to the FMA.

Financial Advisers (Australian Qualified Advisers) Exemption Notice 2018

The Financial Advisers (Australian Qualified Advisers) Exemption Notice 2018 comes into effect on 24 February 2018 and is revoked on 31 May 2021. It revokes and replaces the Financial Advisers (Australian Qualified Advisers) Exemption Notice 2016. The 2018 notice continues the exemptions granted in the 2016 notice, which provide recognition for Australian qualified advisers when they apply to be Authorised Financial Advisers in New Zealand. It also makes some technical reference changes and updates the definition of “Code” to refer to the Code of Professional Conduct for Authorised Financial Advisers brought into force by notice in the Gazette under section 194 of the Financial Advisers Act 2008.

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Exemption granted for managers of ‘notional’ MISs As part of the transition from the old Securities Act regime to the Financial Markets Conduct Act 2013 (FMC Act) regime, a number of bundled unit trust structures (established under the now repealed Unit Trusts Act 1960) were registered as single Managed Investment Schemes (MISs) comprising a number of funds registered together as a scheme, where each of the funds is a separate legal entity with no cross-liabilities to other funds.

Following a consultation last year, the FMA has enacted the Financial Markets Conduct (Financial Statements for Schemes Consisting Only of Separate Funds) Exemption Notice 2017 to provide relief for managers of these types of ‘notional’ MISs from the requirement to prepare financial statements for the registered scheme (consolidating the results of all of the constituent funds) under section 461A of the FMC Act. The FMA sees this requirement as an unnecessary cost for fund managers, with no added benefits to investors. The manager of such a scheme must still prepare financial statements for each separate fund of the scheme.

The exemption does not apply to managers of KiwiSaver schemes.

FMC Act class exemption for irrigation companies The FMA has granted a class exemption for irrigation companies operating under co-operative principles (but not legally structured as co-operative companies) from some disclosure, governance, and financial reporting requirements under the Financial Markets Conduct Act 2013 and the Financial Markets Conduct Regulations 2014. The relief (which is equivalent to relief currently available to co-operative companies) varies according to whether the shareholder investment is small and/or the annual revenue is low. See the Financial Markets Conduct (Irrigation Companies) Exemption Notice 2018.

NZX Limited (NZX)

NZX has published new guidance notes on trading conduct and conflict management for NZX Participants NZX has released a new guidance note to provide greater clarity to NZX Participants on the parameters of permissible trading conduct under both the revised NZX Participant Rules and NZX Derivatives Rules (Rules) which were implemented in December 2017. This includes:

• outlining the key principles that NZX considers underpin the role of participants who trade on NZX’s markets,

• describing acceptable market practices, best practice and recommendations on procedures relevant to order execution, and

• providing details of the types of conduct or behaviour that may potentially breach the Rules or result in regulatory scrutiny.

The Trading Conduct Guidance Note (January 2018) replaces the previous Market Manipulation Guidance Note issued in April 2011.

NZX has also replaced its April 2011 Conflict Management Procedures Guidance Note with a new Conflict Management Guidance Note (January 2018). This guidance note provides NZX Participants with guidelines on what to consider when establishing and operating conflict management arrangements to identify and manage conflicts of interest that NZX Participants may face, or appear to face, in the course of their business activities.

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NZX publishes latest gender diversity statistics for Main Board issuers NZX has released gender diversity statistics on issuers listed on the NZX Main Board (excluding overseas companies) for the 12 month period ending 31 December 2017. The statistics are based on data issuers are required to include in their annual reports.

NZX’s report summarises:

• NZX Main Board listed issuers which reported having a diversity policy • Gender diversity of director and officers listed on the NZX Main Board • Gender diversity of directors and officers listed on the S&P/NZX 50 • Gender diversity of directors and officers by market capitalisation • Gender diversity of directors and officers by sector There has been a slight increase in the number of listed issuers with diversity policies (rising from 44% in 2016 to 51% in 2017), but this has yet to translate into any meaningful increase in the number of women on their boards (which only went up from 17% to 19% over the same period).

A copy of NZX’s Gender Diversity Report is available here.

NZX releases submissions on its Listing Rules review discussion document Last year, NZX released a discussion document outlining the proposed scope and areas of focus for its first holistic review of the Main Board/Debt Market Listing Rules since their introduction in 2003. Copies of the full published submissions on the discussion document are now available here, and a summary of the responses NZX received on the online survey that accompanied the discussion document here. Bell Gully’s submission is available here.

The discussion document and survey explored a wide range of topics, including how to reduce the complexity with the current three equity market structure and accommodate the listing of a broader range of financial products and issuers. NZX also sought feedback on various aspects of the existing Listing Rules with a view to removing any unnecessary complexities and compliance costs, and ensuring the Listing Rules are fit for purpose.

In general, submitters were in favour of NZX moving to a single equity market (with existing Main Board, NXT and NZAX issuers consolidated on to one board), but there were mixed views on what form a single market should take. A number of submitters do not support NZX’s proposal to introduce a two-tier “Premium” and Standard” structure based on the approach adopted by the London Stock Exchange (LSE) and the UK Listing Rules.

NZX has indicated that there will be a further opportunity to provide feedback on proposed rule changes when it releases an exposure draft of the revised Listing Rules. The current target date for that release is April this year, with NZX expecting to be in a position to implement the new Rules in the last quarter of 2018.

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MERGERS & ACQUISITIONS Overseas investment

New category of sensitive land for OIO approval proposed In December last year the Government introduced the Overseas Investment Amendment Bill, which is now before the Finance and Expenditure Select Committee. Submissions on the Bill closed on 16 February and the committee is due to report back to the House by 31 May 2018.

The Bill proposes to change the Overseas Investment Act 2005 to include "residential land" as a new category of sensitive land requiring Overseas Investment Office (OIO) approval. Residential land will be defined by reference to a property's rating status, and will cover land classified as "residential" and "lifestyle" for rating purposes. An overseas person will still be able to buy residential land if they can pass one of the following tests:

• a commitment to reside in New Zealand test,

• an increased housing on residential land test, or

• the benefit to New Zealand test.

It appears that corporates that acquire residential land as part of their business would have to obtain OIO consent to buy residential land. This will require them to focus on the "new housing supply" test or the existing "benefit to New Zealand" test.

The Bill also increases the information-gathering and enforcement powers of the OIO, including by providing for civil liability for those involved in a contravention of the Act.

For further details refer to our earlier client update here.

Takeovers Panel

Latest Takeovers Panel Code Word released In the latest issue of the Takeovers Panel’s Code Word, the Panel has confirmed that it will no longer require certification in a scheme document by directors and senior officers of the ‘offeror’ and ‘target company’ (as was previously indicated in the Panel’s Guidance Note on Schemes of Arrangement so that the standard of disclosure in a scheme of arrangement was equivalent to the standard that would be required by the Takeovers Code in a Code-regulated transaction). This should eliminate the need for unnecessary repetition in scheme documentation, whereby equivalent disclosures in separate appendices to the scheme booklet are often included only to limit the extent of the disclosure that is certified by the ‘offeror’ and the ‘target company’ to the information supplied by or confirmed by their company.

The issue also includes discussion on situations where a Code company fails to comply with exemption conditions.

For full details see Code Word 45 here.

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COMMERCIAL

In the courts

Judicial guidance on the application of the penalty doctrine in New Zealand A recent High Court decision (Honey Bees Preschool Ltd v 127 Hobson Street Limited [2018] NZHC 32) offers a welcome clarification that New Zealand will follow the approach of the UK Supreme Court to the “penalty doctrine”.

In adopting the UK approach, the New Zealand High Court has narrowed the scope of the penalty doctrine to payments arising upon breach of contract, making it much clearer for those drafting contracts to know when the doctrine might be engaged. The decision also heralds the end of the old test for the penalty doctrine which asks whether the clause is a “genuine pre-estimate of loss”, and instead asks a much broader question about whether there is a bona fide interest that the clause is trying to protect, and whether the consequences of non-performance are proportionate to that interest.

The decision will be of particular interest to those considering liquidated damages-type clauses in their contracts.

For Bell Gully commentary on this decision see our earlier client update here.

Legislative developments

First tranche of AML/CFT Phase 2 regulations enacted The first tranche of regulations have been enacted under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act 2009 following recent amendments to the Act to put in place Phase 2 of New Zealand’s AML/CFT laws.

Consistent with the staged implementation of the Phase 2 sectors, new regulations will be made in different rounds or “tranches”. This first tranche covers matters that need to be addressed before the first Phase 2 reporting entities (lawyers, conveyancers and trust and company service providers) are required to comply on 1 July 2018.

Wider changes to the AML/CFT regime that are also due to come into effect on 1 July 2018, and which affect all (Phase 1 and Phase 2) reporting entities, have also been addressed.

The Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Amendment Regulations 2017 make changes to the Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Regulations 2011 which include prescribing:

• the form of suspicious activities reports which apply to Phase 1 reporting entities from 1 July 2018 and Phase 2 reporting entities (other than high value dealers) from the date they have to start complying with the AML/CFT; and

• two different forms of the annual AML/CFT report required under the Act, one for reports by financial institutions and one for reports by designated non-financial businesses and professions.

The Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Amendment Regulations 2017 extends the expiry date of the Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Regulations 2011 to 30 June 2020. They also insert a new regulation which declares a number of financial

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activities not to be occasional activities for the purposes of the AML/CFT Act, and declares that activities carried out by casinos or the New Zealand Racing Board are not occasional activities.

The Anti-Money Laundering and Countering Financing of Terrorism (Cross-border Transportation of Cash) Amendment Regulations 2017 revoke the expiry date for the Anti-Money Laundering and Countering Financing of Terrorism (Cross-border Transportation of Cash) Regulations 2010 so that they continue in force, subject to any amendments, until replaced or revoked. These regulations also change the threshold value from $9,999.99 to $10,000 for the purposes of the provisions in the AML/CFT Act which regulate reporting on the movement of cash into or out of New Zealand and the receipt of cash from outside New Zealand.

The Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Amendment Regulations 2017 make a number of consequential changes to the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011. The most important of these include:

• prescribing a figure of $10,000 as the applicable threshold value for paragraph (a) of the definition of occasional transaction in section 5(1) of the AML/CFT Act instead of $9,999.99,

• progressively amending and finally revoking regulation 20(1)(a) of the 2011 regulations (which provides exemptions from the status of reporting entity for lawyers, conveyancers, accountants, incorporated law firms, incorporated conveyancing firms, and real estate agents) to harmonise with the staged application of the AML/CFT Act to those professions,

• enabling information obtained under the Financial Service Providers (Registration and Dispute Resolution) Act 2008 (FSPR Act) to be disclosed under the AML/CFT Act by a government agency or an AML/CFT supervisor to another AML/CFT supervisor or government agency, if the disclosing entity has reasonable grounds to believe that the disclosure of that information is necessary or desirable for the purpose of ensuring compliance with the AML/CFT Act and regulations under that Act.

AML/CFT Guidance notes updated The following AML/CFT guidance and explanatory notes were updated in December 2017:

• the ordinary course of business guideline which replaces the previous version published in 2012,

• the designated business group formation guideline and the designated business group scope guideline which replaces the previous versions published in 2012,

• the enhanced customer due diligence guideline, and

• the explanatory note to the identity verification code of practice which replaces the previous version published in 2013.

In addition the Department of Internal Affairs (DIA) Supervisor has published the AML/CFT Risk Assessment and Programme: Prompts and Notes for DIA reporting entities. This guideline provides DIA-supervised reporting entities with a series of questions, supervisory expectation, reference material and suggested best practice to help guide their risk assessment and programme.

The DIA has also published the first AML/CFT risk assessment for reporting entities covered by Phase 2 of the AML/CFT Act here.

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Facilitating digital interactions in existing legislation The Electronic Interactions Reform Act 2017 came into force at the end of 2017 and amends a range of legislation to facilitate specific digital interactions. It includes amendments to provisions relating to the giving of evidence and notice under the Commerce Act, the Companies Act 1993 and the Fair Trading Act 1986.

Agreement reached on CPTPP with signing in March 2018 On 23 January 2018, negotiations on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) between New Zealand and the other 10 countries remaining in the Trans-Pacific Partnership (TPP) were concluded.

The text of the CPTPP is expected to be made public on 21 February 2018, subject to the agreement of all parties. It is reported to have largely maintained the original TPP Agreement which was signed in February 2016, but never made it into force following the withdrawal of the United States. Twenty items from the original TPP (which primarily were sought by the United States and agreed to by other countries in return for access to US markets) will be suspended under the CPTPP. These suspensions, and what they mean for New Zealand, are explained by the Ministry of Foreign Affairs and Trade (MFAT) here. Agreement of all CPTPP members would be needed for these provisions to apply in the future as part of CPTPP.

For an overview of the CPTPP and its relevance to New Zealand, visit MFAT’s website here. MFAT has also provided answers to a number of common questions on the CPTPP here. Prime Minister, Jacinda Ardern has also indicated that a full National Interest Analysis on the CPTPP will be released on 21 February 2018.

It is expected that the signing ceremony for the CPTPP will take place in Chile on 8 March 2018. After the agreement is signed, the CPTPP won’t be implemented in New Zealand unless at least half the signing countries ratify it and unless New Zealand is one of those countries.

COMPETITION AND CONSUMER LAW

Legislative developments

Government puts cartel criminalisation back on the table Last week, the Minister of Commerce and Consumer Affairs, Kris Faafoi tabled the Commerce (Criminalisation of Cartels) Amendment Bill in the House.

The Bill reintroduces a proposal to criminalise cartel conduct that had been scrapped by the previous government. The Bill proposes a penalty of imprisonment for up to seven years for individuals that intentionally enter into or give effect to a cartel provision (which includes price fixing, restricting output, or market allocating). The Bill provides for a two-year transitional period before the criminal offence provisions would come into effect.

The government's rationale for criminalisation is to bring our regime into line with key trading partners such as Australia, the US and the UK (all of which have criminal regimes) and to promote deterrence and detection. While the US has had criminal sanctions in place for some time, Australia and the UK criminal regimes are comparatively recent and it is still too early to tell whether criminalisation has indeed had the desired effect.

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The proposal is a surprising development following the abandonment of such an idea in 2015 by the then National Government where, following a strong majority of submissions opposing criminalisation, Paul Goldsmith (the Minister of Commerce and Consumer Affairs at the time) formed the view that the arguments in favour of criminalisation were outweighed by those against it. While a range of other major amendments to the Commerce Act were finally passed in August last year, criminalisation was not amongst them.

Bell Gully will continue to monitor the progress of the Bill through the House and if you would like to know more about the other changes to be made by the Bill, please contact your usual Bell Gully adviser.

New Zealand Commerce Commission (NZCC)

Media releases The NZCC has issued the following media releases:

Industry regulation and regulatory control

Status quo confirmed for gas companies seeking customised price-quality paths The NZCC has released its final decision not to amend the information requirements applying to gas pipeline businesses who apply for a customised price-quality path. The decision is part of the review of Input Methodologies, which are the upfront rules, requirements and processes that apply to businesses the NZCC regulates in markets with little or no competition. Click here for more

NZCC releases final report on annual review of Fonterra’s Milk Price Manual The NZCC has released its final report on its annual review of Fonterra’s Milk Price Manual for the current dairy season. The manual sets out Fonterra’s methodology for calculating the price it will pay farmers per kilogram of milk solids for the current dairy season, ending 31 May 2018. The review is part of the milk price monitoring regime under the Dairy Industry Restructuring Act. Click here for more

Public information disclosure requirements tidied up for regulated businesses The NZCC has updated its information disclosure requirements for regulated international airports, electricity lines companies and gas pipeline businesses. Under Part 4 of the Commerce Act, regulated businesses are required to publicly disclose information about their performance, including their profitability, revenue, capital expenditure and operating expenditure. This form of regulation is intended to shed a light on their performance for stakeholders and consumers. Click here for more

Updated rules for related party transactions for gas pipeline and electricity lines companies The NZCC has released its final decision to update the rules around related party transactions for electricity lines and gas pipeline businesses. Regulated electricity and gas businesses can choose to obtain services from a related party rather than competitively tender work out. As a result, regulated businesses may face incentives to give work, like network maintenance or tree trimming, to their unregulated related parties, even if an independent contractor could offer a better price or service. Click here for more

Draft decision on Wellington Electricity’s $31 million earthquake readiness plan The NZCC has released its draft decision on Wellington Electricity’s proposal to spend $31 million on improving its network’s resilience to a major earthquake. The NZCC is satisfied that the expenditure is needed and appropriate to ensure Wellington’s network is better prepared to withstand a major earthquake. Click here for more

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Mergers and acquisitions

Statement of Preliminary Issues released for MYOB/Reckon merger The NZCC has published a Statement of Preliminary Issues relating to MYOB Group Limited’s proposed acquisition of the Accountants Group business of Reckon Limited. MYOB provides software solutions to businesses and accounting practices in New Zealand and Australia. It is seeking clearance to acquire the Accountants Group business of Reckon which provides accounting, tax, and other software to accounting practices under the Reckon APS brand. Click here for more

Statement of Preliminary Issues for Heinz Wattie’s/Cerebos Gregg’s merger The NZCC has published a statement of preliminary issues relating to an application from H. J. Heinz Company (New Zealand) Limited to acquire the food and instant coffee business of Cerebos Gregg’s Limited. The statement outlines the main issues the NZCC considers important in deciding whether or not to grant clearance to the proposed merger. Click here for more

NZCC welcomes High Court’s dismissal of NZME/Fairfax merger appeal The NZCC has welcomed the High Court’s dismissal of NZME and Fairfax’s appeal against the NZCC’s decision to decline their media merger. In May 2017 the NZCC declined the merger on the grounds it would be likely to substantially lessen competition in advertising and reader markets. The NZCC also determined it would concentrate New Zealand news media ownership and influence to an unprecedented extent for a well-established modern liberal democracy. Click here for more

Rhone seeks clearance to acquire swimming pool equipment company Fluidra The NZCC has published a Statement of Preliminary Issues relating to Rhone Capital LLC’s proposed acquisition to acquire up to 100% of the shares or assets of Fluidra S.A.. Rhone is a New York-based private equity firm that owns a number of entities, including the Zodiac group of companies, who supply a range of swimming pool equipment globally. In New Zealand, Zodiac imports and distributes a range of equipment used in residential pools, including pumps, filters, cleaners, heating, and automation systems. It also manufactures a range of residential pool covers in Auckland. Click here for more

Telecommunications

NZCC restarts study into telecommunication backhaul services The NZCC is recommencing its study into domestic telecommunication backhaul services. In August 2016 the NZCC started the study to better understand how domestic backhaul services have evolved, how demand for different backhaul services may develop in future, and to consider whether any regulatory changes would better promote the long-term interests of consumers. The study was put on hold in February 2017. Click here for more

Annual Telco Monitoring Report shows pace of industry change The NZCC has released its Annual Telecommunications Monitoring Report which reveals the key broadband and mobile trends for the year to 30 June 2017. Telecommunications Commissioner Dr Stephen Gale said this year’s report has been condensed to focus on key trends, allowing it to be out 5 months earlier than in the past. Click here for more

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Market behaviour

NZCC grants collective bargaining authorisation for Waikato – Bay of Plenty Chicken Growers Association The NZCC has granted authorisation to allow members of the Waikato - Bay of Plenty Chicken Growers Association Incorporated to collectively bargain with Inghams Enterprises (NZ) Pty Limited. The Association, on behalf of members, asked for authorisation to collectively negotiate the terms and conditions under which its members supply chicken growing services to Ingham’s. Click here for more

Proceedings filed against herd management and milk testing company for cartel conduct The NZCC has filed proceedings in the High Court at Auckland against GEA Milfos International Limited for alleged cartel conduct in the supply of milk testing products and services, and herd management systems. The NZCC alleges that Milfos breached the Commerce Act by engaging in cartel conduct between mid-2012 and September 2014. The conduct relates to Milfos allegedly entering into an agreement with a competitor to fix, control or maintain the prices of milk testing products and services and herd management systems. Click here for more

South Island veterinary business warned over likely price fixing with competitor The NZCC has warned VetLife Limited that it is likely to have breached the Commerce Act by price fixing with one of its competitors. The warning relates to VetLife entering into and giving effect to an agreement in 2015 with a competing veterinary practice relating to the supply of a restricted veterinary medicine. Click here for more

NZCC releases competitor collaboration guidelines for new law The NZCC has released a final version of its guidelines for assessing collaborations between competitors as a result of amendments to the law relating to cartels. The guidelines provide a broad overview of the NZCC’s approach to enforcing the new law. Changes to the Commerce Act include a new cartel prohibition with exceptions for collaborative activities, vertical supply contracts and joint buying agreements. Click here for more

Consumer issues

If you can’t back it up, don’t say it The NZCC has released a new video, giving guidance to traders on false, misleading or unsubstantiated claims and how to avoid making them. The video’s title and key message is ‘if you can’t back it up, don’t say it.’ Click here for more

TSB Bank to repay customers after miscalculating break fees TSB Bank Limited will repay customers who were inadvertently overcharged for terminating their fixed-term lending agreements. TSB identified three errors in the way it calculated the fee it charges for early termination (known as a break fee). These errors led to some customers being overcharged and some being undercharged. TSB reported the errors to the NZCC in April 2016 as a potential breach of the Credit Contracts and Consumer Finance Act. Click here for more

Stuff Fibre warned for claiming it is “Probably NZ’s Fastest Internet” The NZCC has issued a warning to NZ Fibre Communications Limited for making unsubstantiated claims that it is “Probably NZ’s Fastest Internet.” The NZCC’s investigation found Stuff Fibre was likely to have breached the Fair Trading Act because it did not have reasonable grounds for making the claim. Click here for more

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NZCC alerts public to LuxStyle online sales method The NZCC is alerting the public to be wary when browsing for products online on sites operated by Lux International Sales ApS, a company based in Denmark. Luxstyle operates the luxstyle.co.nz website, but also reaches consumers via social media advertisements which direct consumers to online portals. The NZCC is concerned that consumers are being misled in circumstances where they do not intend to make a purchase. Click here for more

Debt collection group to credit customers overcharged after goods repossessed Debt collection group Receivables Management has agreed to credit more than $1.4 million to around 1,700 customers who were wrongly charged interest, costs and fees on loans after their goods had been repossessed and sold. This follows a NZCC investigation into whether the group breached the Fair Trading Act by incorrectly claiming it had the right to charge interest, costs and fees to loan balances after the repossession and sale of consumer goods. Click here for more

Warning to NZ Trustees Association Charitable Trust for sending invoices for unsolicited membership services The NZCC has issued a warning to NZ Trustees Association Charitable Trust about concerns with invoices it sent to registered New Zealand charities for membership services. Following its investigation, the NZCC found that the Trustees Association was likely to have breached the Fair Trading Act by invoicing the charities for unsolicited membership services. Click here for more

NZCC lays charges against EuroSteel The NZCC confirms that 59 charges under the Fair Trading Act have been laid against Euro Corporation Limited for making false and misleading representations about its steel mesh product known as SE615. The charges were filed in the Auckland District Court and relate to representations made between 2012 and 2015. Click here for more

Auckland dealership Motor Me warned for misleading conduct when selling used cars Motor Me owner and operator Brent Smith has been warned by the NZCC that he has likely breached the law for misleading consumers about the quality of the cars Motor Me sold. In the NZCC’s view Mr Smith, trading as Motor Me, has likely breached the Fair Trading Act by making false or misleading representations about the quality, history and AA endorsement of the cars offered for sale. Click here for more

Mobile trader fined despite being liquidated A mobile trader has been fined more than $100,000 despite going into liquidation in early 2017. Appenture Marketing Limited (In Liquidation) was fined $114,000 in the Auckland District Court, for misleading consumers about their rights and for failing to provide consumers with key contract information. Click here for more

Toy importer fined for selling unsafe toys Toy importer Mega Import and Export Limited has been fined $65,000 for selling toys which did not comply with a mandatory standard. Mega Import pleaded guilty to two charges under the Fair Trading Act last year and was sentenced in the Auckland District Court on 9 February. Click here for more

Supercrete Auckland director fined $37,500 for claiming generic cladding was premium brand The former director of Supercrete Auckland Limited has been fined $37,500 for misrepresenting generic Chinese cladding as the premium Australian-made ‘Hebel’ brand. Supercrete was removed from the register of companies in August 2016. Christopher Middleditch earlier pleaded guilty to three charges under the Fair Trading Act for making false or misleading representations between July 2012 and April 2013. Click here for more

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Sunscreen producer will meet NZ standard for SPF testing Sunscreen producer Johnson & Johnson (New Zealand) Limited has undertaken to the NZCC to only sell sunscreen products which meet the joint Australian/New Zealand standard. The NZCC opened an investigation following a complaint from Consumer New Zealand. Consumer NZ alleged that it had tested the SPF value of one of JJNZ’s Neutrogena-range products, Sensitive Skin SPF60+, and found that the SPF protection was significantly less than the label claimed. Click here for more

Australian Competition and Consumer Commission (ACCC)

Selected ACCC media releases The ACCC has issued the following media releases:

Mergers and acquisitions

ACCC to oppose BP's acquisition of Woolworths service stations The ACCC has announced that it intends to oppose the proposed acquisition by BP Australia Pty Ltd of Woolworths Limited’s network of retail service station sites. It considers that BP acquiring Woolworths’ service stations will be likely to substantially lessen competition in the retail supply of fuel. Click here for more

ACCC won't oppose Jubilee sawmill acquisition The ACCC will not oppose OneFortyOne Plantations’ proposed acquisition of the Jubilee Highway Sawmill in Mount Gambier from the Carter Holt Harvey Group, which includes the associated woodchip export operations at Portland. Despite concerns by industry participants, the ACCC concluded that it would be unlikely to substantially lessen competition. Click here for more

Market behaviour

Criminal cartel proceedings commenced against Country Care and its managers Following an investigation by the ACCC, criminal charges have been laid against The Country Care Group Pty Ltd, its Managing Director, Robert Hogan, and a former employee, Cameron Harrison. The charges relate to alleged cartel conduct involving assistive technology products used in rehabilitation and aged care, including beds and mattresses, wheelchairs and walking frames. Click here for more

Consumer issues

Catchdeal, Techrific and BecexTech to offer refunds Online electronics retailers, BXT International Ltd and TCF Global Ltd have admitted to contravening the Australian Consumer Law and provided court-enforceable undertakings to the ACCC. Until September 2017, BecexTech, Techrific and CatchDeal advertised electronic goods such as mobile phones and tablet computers as 'new', when they were in fact refurbished. Click here for more

Hyundai to improve consumer guarantees approach The ACCC has today accepted a court enforceable undertaking from Hyundai to improve its compliance with consumer guarantee obligations under the Australian Consumer Law. Customers have automatic rights under the Consumer Law, regardless of whether a problem with a new car is covered by the manufacturer’s warranty, and may in fact be entitled to a better remedy under the consumer guarantees than a warranty. Click here for more

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