FEBRUARY ISSUE | 2020

In this edition we look at proposed updates to the Fair Trading Act 1986 rules against unfair conduct and the criminalisation of cartel behaviour in the Commerce Act 1986.  We also take a look at incoming changes to privacy law and incorporated societies legislation.

STRENGTHENING RULES AGAINST UNFAIR COMMERCIAL PRACTICES

The Fair Trading Amendment Bill (Bill) has been introduced to Parliament.  The Bill contains new unfair commercial practice protections for both businesses and consumers.  The changes are intended to support the Fair Trading Act and its overarching purpose of contributing to a trading environment in which consumers are protected, businesses compete effectively, and consumers and businesses participate confidently.

To achieve this the Bill makes a few additions, most notably:

  • Introducing a new prohibition against “unconscionable conduct” in trade;
  • Extending the rules against unfair contract terms to standard form business arrangements with a value less than $250,000 (called “small trade contracts”);
  • Strengthening consumers’ ability to prevent uninvited direct sellers from entering their property, including by using generally worded written notices.

These additions largely reflect the changes proposed in public consultation earlier this year. 

Please contact us if you have any questions about the new unfair commercial practice protections.

CARTEL BEHAVIOUR CRIMINALISED

The Commerce (Criminalisation of Cartels) Amendment Act 2019 (Amendment Act) was passed in April last year and will commence on 8 April 2021.  The Amendment Act amends the Commerce Act 1986 to make engaging in cartel behaviour (ie price fixing, restricting output, and market allocating) a criminal offence.

The Amendment Act is designed to promote the detection and deterrence of cartels and improve the Commerce Commission’s enforcement of cartel prohibitions, in turn facilitating New Zealand’s contribution to efforts against cartels globally.

Individuals convicted of intentional cartel behaviour will face up to seven years in prison, a fine not exceeding $500,000, or both.  Persons other than an individual (bodies corporate) convicted of the same will face a fine not exceeding the greater of:

  • $10 million; or
  • either:
  • if the resulting commercial gain can be ascertained, 3 times the value of that gain; or
  • if the resulting commercial gain cannot be ascertained, 10 per cent of the turnover of the person and all its interconnected bodies corporate for every relevant financial period.

This new criminal liability will augment the existing civil remedies that deter the use of anti-competitive cartel provisions.  Criminalisation aligns New Zealand with the law in most developed countries.

Please contact us if you have any questions about the criminalisation of cartel behaviour.

PRIVACY LAW CHANGES APPROACHING

The Privacy Bill (Bill) is nearing the end of its Parliamentary journey and will likely become law in 2020.  The Bill will replace the Privacy Act 1993, updating our privacy laws to reflect technological change.

The most notable changes are:

  • Strengthened information privacy principles;
  • A requirement to report serious privacy breaches to the Privacy Commissioner;
  • An ability for the Privacy Commissioner to issue agencies with compliance notices to make them do or stop doing something in order to comply with privacy laws;
  • Express limitations on disclosure of personal information to overseas persons;
  • A requirement for all agencies to appoint a Privacy Officer.

All entities that collect, store, and use personal information about their customers or employees need to be aware of their obligations under privacy laws.  Now is an opportune time to review privacy policies, educate staff, and ensure personal information is properly stored and disposed of.

Please contact us if you have any questions about the upcoming privacy law changes.

INCORPORATED SOCIETIES ACT REVIEW

We expect the much anticipated Incorporated Societies Bill (Bill) to be introduced to Parliament in the first half of this year.  The Bill is designed to replace the outdated Incorporated Societies Act 1908, and bring the governance of incorporated societies into line with that of companies.

Most importantly, the Bill clarifies officers’ duties with six broadly expressed duties that are modelled on and largely reflect the directors’ duties in the Companies Act 1993.  The definition of “officer” is to be aligned with the Charities Act 2005, encompassing all persons with significant influence over the affairs of the society.

Officers will also be expected to properly disclose conflicts of interest.  The rules will require disclosure of all interests to the committee (the society’s governing body) and in an interests register kept by the committee.

More will be expected of societies’ constitutions.  Clause 24 of the Bill imposes several mandatory requirements, including:

  • provisions for the composition, roles, and functions of the committee, including the number of committee members, election and/or appointment of committee members, terms of office of committee members, functions and powers of the committee, and grounds for removing committee members;
  • procedures for resolving disputes between members in their capacity as members and disputes between members and the society; and
  • nomination of a not-for-profit entity, or a class or description of not-for-profit entities, to which any surplus assets of the society are to be distributed on the liquidation or deregistration of the society.

Please contact us if you have any questions about the Incorporated Societies Bill.

Quick links

Tom Mahony
Principal
E: tom.mahony@mhlaw.co.nz
P: 04 974 4703
 
Mitchell Souness
Law Clerk
E: mitchell.souness@mhlaw.co.nz
P: 04 974 4707

Disclaimer:  The information contained in this newsletter is provided for information purposes only, and should not be construed as legal advice on any particular matter.