Corporate Reporter - July 2021

CORPORATE REPORTER 29 July 2021

ITEMS IN THIS ISSUE INCLUDE:

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NZX consults on changes to its listing rules, guidance notes, and the treatment of debt instruments

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New ‘stepping stone’ market launched

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Recent FMA exemptions, reports, guidance and consultations

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Overseas investment changes in force

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Takeovers Panel consults on changes to the Takeovers Code

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Final advice released by the Climate Change Commission

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AML/CFT regulatory updates

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Consumer data right regime proposed for New Zealand

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

WELCOME to issue No.68 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.

For more information on any of the cases, articles and features in Corporate Reporter, please email diane.graham@bellgully.com or call on +64 9 916 8849

CONTENTS Capital Markets

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Consultation on regulatory details for the new financial markets infrastructure regime New ‘stepping stone’ market launched – the Catalist Public Market NZX conducts its first ‘hygiene’ review of the NZX Listing Rules NZX consults on proposed new practice note on the offer of warrants NZX consults on the quotation of debt instruments FMA releases 2021 NZX General Obligations Review Further changes to the new Reserve Bank governance model under the RBNZ Bill Select Committee opens cryptocurrency inquiry RBNZ consults on interim insurance solvency standard FMA releases further findings on its insurance conduct and culture review FMA continues relief for employee share purchase schemes FMA provides update on its review of FMC Act class exemption notices FMA publishes new guide for financial advice providers’ full licence applications New guidance for FPAs on cyber resilience Temporary relief from certain regulatory reporting obligations FMA review findings and guidance on the filing of financial statements FMA Information Sheet updated on the FMC Act lender responsibilities exclusion Report on FMA’s MIS liquidity risk management review New FMA levies came into force on 1 July 2021

Mergers & Acquisitions

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New overseas investment provisions in place Takeovers Panel consults on changes to takeovers legislation

Commercial

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Consultations on further reforms for the NZ ETS Final advice released by the Climate Change Commission New AML/CFT regulations for nominee directors and nominee general partners Recent amendments to existing AML/CFT regulations New guidance from the AML/CFT Supervisors Terminating a business relationship under the AML/CFT Act New Zealand Supreme Court reviews principles of contract interpretation High Court upholds cap on liability in contract for professional services

Competition and Consumer Law

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Government has agreed to establish a consumer data right framework Some final tweaks to the Fair Trading Amendment Bill New certification requirement for lenders and mobile traders Due diligence guidance for consumer credit providers The latest media releases from the New Zealand Commerce Commission The latest media releases from the Australian Competition and Consumer Commission.

Disclaimer: This publication is necessarily brief and general in nature. You should seek professional advice before taking any further action in relation to the matters dealt with in this publication.

All rights reserved © Bell Gully 2021.

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Consultation on regulatory details for the new financial markets infrastructure regime The Reserve Bank of New Zealand (RBNZ) and the Financial Markets Authority (FMA) have released an overview of their plans for the implementation of the new Financial Market Infrastructure Act 2021 (FMI Act), together with two consultation papers on some outstanding issues that were not addressed in the Act. The FMI Act, which will be implemented over a transitional period of approximately 18-months, was passed in May this year to reform the law in New Zealand governing payment systems, securities settlement systems, central counterparties, trade repositories, and other financial market infrastructures (FMIs). It replaces the more narrowly-focused Parts 5B and 5C of the Reserve Bank of New Zealand Act 1989, which currently regulate payment and settlement systems.

The joint regulators’ FMI Act implementation plan released this week provides more detail on their approach to the development of regulatory requirements that FMIs will face under the new regime. The document also discusses other aspects, such as how the FMA and RBNZ will work together as the joint ‘Regulator’, the use of information gathering and monitoring powers, and details regarding the drafting of commencement orders and fees. A timeline of their implementation plan is included in the document, which shows how the various pieces of work will be progressed during the implementation transition period.

In addition, the FMA and RBNZ have released two consultation papers. The first consultation paper sets out specific factors that they intend to have regard to when carrying out an assessment to identify ‘systemically important FMIs’ (that is, FMIs that can be 'called in' to what is otherwise an 'opt in' designation regime). The second consultation paper sets out their intended approach for developing standards for designated FMIs. Submissions for both consultations close on 20 September 2021. For further details on these consultations, read our update here.

You can also read our updates on the development of the FMI Act here.

New ‘stepping stone’ market launched – the Catalist Public Market On 31 May 2021, the Minister of Commerce and Consumer Affairs granted a licence to Catalist Markets Limited (the market operator) to operate a new market, Catalist Public Market under the Financial Markets Conduct regime.

The Catalist Public Market (Catalist) is targeted at small and medium-sized businesses to help alleviate the difficulties faced by those businesses to access capital. There are currently no listings on Catalist.

How does it operate?

Catalist operates as an online platform for financial products on which trading occurs only during periodic auctions, as opposed to the usual continuous trading that is conducted on traditional exchanges such as NZX. The auction frequency will be set by each issuer, and could take place monthly, quarterly, or yearly.

Issuers listing on Catalist will be subject to the market’s listing rules, which include governance and disclosure obligations.

Only issuers with an initial market capitalisation of NZ$60 million or less are eligible to list on the market, and issuers whose market capitalisation subsequently exceeds NZ$100 million have a two-year period to transition off the market. Equity securities, debt securities and managed investment products (as defined in the Financial Markets Conduct Act 2013 (FMC Act)) can be quoted on the market.

The system established for the electronic transfer of financial products that are traded in auctions conducted by Catalist Markets Limited has been approved under the Financial Markets Conduct (Approval of Catalist Electronic Transfer System) Order 2021.

Exemptions from regulatory obligations Various regulatory amendments and exemptions have been put in place to lower what have been determined as disproportionate cost barriers to capital raising for issuers on Catalist.

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CO R PO RA TE RE PO RTE R The Financial Markets Conduct (Catalist Public Market) Regulations 2021 provide for: • alternative disclosure requirements to apply to Catalist’s listed issuers allowing for periodic disclosure (to align with the periodic auctions) rather than continuous disclosure, and • modified financial reporting requirements to apply to Catalist’s listed issuers, so that issuers will not be subject to a higher standard of financial reporting and auditing only because they are listed on Catalist.

In addition, the Financial Markets Conduct (Catalist Public Market) Exemption Notice 2021 provides exemptions, subject to certain conditions, to enable issuers listed on Catalist to make ‘same class’ offers and to permit small offers of NZ$2 million or less to be made, without the disclosure normally required under Part 3 of the FMC Act. Holders of an exempt issuer's financial products are also exempt from the FMC Act disclosure requirements where they are offering those products by way of sale.

The Takeovers Code (Catalist Public Market Issuers) Exemption Notice 2021 grants an exemption from rule 6(1) of the Takeovers Code in respect of allotments, acquisitions, and buybacks relating to issuers which are “code companies” solely by virtue of being listed on the Catalist Market. Examples of the types of costs that would have been incurred had the exemption not been granted include the costs of holding a shareholders’ meeting to approve an acquisition or allotment under the Code, and the cost of obtaining an independent adviser’s report.

The exemption applies only if the issuer meets four main requirements. First, the issuer must not have been a code company immediately before becoming listed on Catalist. Second, the issuer’s board must resolve that, in its opinion, opting out of the Code is in the best interests of the issuer. Third, that resolution must be repeated at least every 18 months. Fourth, the issuer must disclose details about its opt-out from the Code.

NZX conducts its first ‘hygiene’ review of the NZX Listing rules NZX is consulting on proposed hygiene amendments to its Listing Rules and certain accompanying Guidance Notes.

The exposure drafts and a consultation paper detailing these amendments are available on NZX’s website.

The amendments have been designed to improve the operation and clarity of the Listing Rules and do not contain any substantive amendments or material policy changes.

Submissions close on 30 July 2021.

NZX consults on a new practice note on the offer of warrants The exposure draft of the proposed practice note outlines the standard timetable that issuers can follow for offers of warrants where quotation is sought on the NZX Main Board.

The practice note is a useful clarification of how to interpret the Listing Rules to a warrant issue. However, there are some additional aspects that could be covered. This includes addressing the application of the timetable requirements in NZX Listing Rule 4.17, which do not take into account a warrant issue with a long acceptance period and no issue price.

NZX consults on the quotation of debt instruments NZX has developed a suite of proposals for the treatment of debt instruments that are designed to provide greater clarity to the market and standardise the treatment of certain types of instruments.

NZX is proposing to: • quote new negative yield or zero coupon debt instruments on a price basis, • treat instruments that comply with the RBNZ’s requirements for Additional Tier 1 capital as debt securities for the purposes of the NZX Listing Rules, and quote these instruments on a price basis, • quote instruments that comply with the RBNZ’s requirements for Tier 2 capital on a yield basis, • retain the yield quotation status of non-vanilla debt instruments affected by the NZFMA proposal, and • maintain the current treatment of debt instruments which are priced to the next interest rate reset date.

The consultation paper on these proposals is available here. Submissions closed on 16 July 2021.

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FMA releases 2021 NZX General Obligations Review The FMA has released its latest annual review on how well NZX is meeting the requirements for its market operator licence.

The review concludes that NZX complied with its licensed market operator obligations during the review period, subject to the findings published in the FMA’s January 2021 targeted review report, which concluded that NZX failed to meet its market operator obligations by not having sufficient technological resources. Since that report, the FMA has approved a formal action plan provided by NZX to address the issues raised by the FMA, and it will be monitoring NZX’s implementation of its action plan throughout the next review period.

This annual review focused on surveillance monitoring, aspects of conflicts management, and monitoring and enforcement in relation to continuous disclosure requirements.

Read more in the FMA’s 2021 NZX General Obligations Review.

Further changes to the new Reserve Bank governance model under the RBNZ Bill Work to replace the current Reserve Bank Act 1989 with a proposed Reserve Bank of New Zealand Act and a Deposit Takers Act continues to progress.

The Reserve Bank of New Zealand Bill which was introduced into Parliament last year, has been reported back to the House by the Finance and Expenditure Committee, and has passed its second reading. It is now at the Committee of the whole House stage and is expected to receive Royal Assent later this year, and commence in mid-2022.

The Bill provides a revised framework for the objectives, functions, management and governance of the Reserve Bank of New Zealand (RBNZ). This includes: • establishing a new governance board responsible for all decision making (except decisions made by the Monetary Policy Committee), • replacing the position of Governor with a new chief executive role under direction of the board, and • requiring the Minister to issue a Financial Policy Remit that the board must have regard to.

In response to submissions on the Bill, and following further analysis and engagement by officials, the Finance and Expenditure Committee recommended various amendments to the Bill. These included making the RBNZ Governor a member of the governance board, as well as the chief executive. Other changes included: • clarifying the new board’s financial responsibility duty and making it explicit that the board does not have to implement monetary policy that is inconsistent with this duty, and • allowing the Minister to direct RBNZ to maintain a minimum level of capital.

Further changes to the Bill (introduced through Supplementary Order Papers here) are also being discussed in the Committee of the whole House, together with some technical changes to the Bill introduced by the Government under Supplementary Order Paper No. 44.

Drafting of the Deposit Takers Bill is now underway, with public consultation on an exposure draft expected in October this year. This Bill is expected to be introduced into the House in late 2021, and receive Royal assent in early 2023.

Select Committee opens cryptocurrency inquiry Parliament’s Finance and Expenditure Committee has opened an inquiry into the current and future nature, impact, and risks of cryptocurrencies.

The terms of reference for the inquiry are very broad. They include: • inquiring into, and establishing the nature and benefits of cryptocurrencies to: o

establish how cryptocurrencies are created and traded,

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understand the environmental impact of ‘mining’ cryptocurrencies, and

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identify risks to users and traders of crypto-currencies,

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CO R PO RA TE RE PO RTE R • identifying the risks cryptocurrencies pose to the monetary system and financial stability, including tax implications, in New Zealand, • establishing how cryptocurrencies are used by criminal organisations, and • establishing whether means exist to regulate cryptocurrencies, either by sovereign states, central banks, or multi-lateral co-operation.

Dr Duncan Webb, chairperson of the committee said “This inquiry will give us a good opportunity to further our understanding of this increasingly important topic.”

Further details on the inquiry are still to be notified by the committee.

RBNZ consults on interim insurance solvency standard The RBNZ is consulting on an interim Solvency Standard as part of its review of the Insurance Prudential Supervision Act 2010 (IPSA) and its associated Insurer Solvency Standards. The consultation will be open until 1 October 2021.

The Solvency Standard determines the minimum amounts of capital that insurers must hold, so that policyholders can be comfortable that an insurance company has enough funds to meet its promises to policyholders, even if it fails. The interim Solvency Standard is due to take effect in early 2022, and will be in force for around three years. A final Solvency Standard is expected to be in force in 2024 following an IPSA amendment.

The RBNZ intends for the interim Solvency Standard to: • provide a standard that will work effectively once insurers have adopted the new accounting standard for insurance contracts (IFRS 17), • embody the core principles that will shape the final Solvency Standard, • follow the broad structure of the final Solvency Standard, and • reflect the agreed Solvency Standard review principles (for a stocktake against the principles).

The Interim solvency standard consultation paper and the Exposure draft of the Interim Solvency Standard have been released on RBNZ’s website, together with feedback received from previous consultations on the structure of the Solvency Standards and IFRS 17; and on the scope of IPSA and treatment of overseas insurers.

FMA releases further findings on its insurance conduct and culture review This latest update from the FMA summarises findings from its evaluation of New Zealand fire and general insurers’ responses to a conduct and culture review undertaken by the FMA and RBNZ. The FMA and RBNZ released their Life Insurer Conduct and Culture review report in January 2019. After publishing the report, the FMA asked all licensed New Zealand fire and general insurers to review their operations to make sure there were no material conduct issues within their business. The insurers were given until December 2020 to respond (after an extension was given due to the impact of COVID-19).

The review found that there is a poor understanding of, and commitment to, good conduct and culture practice across the fire, general and health insurance sectors. It also found that the majority of insurers were not prepared for the regime being introduced under the Financial Markets (Conduct of Institutions) Amendment Bill (COFI), which is expected to come into force in early 2023.

In its response to the FMA update, the Insurance Council of New Zealand (which represents 16 of the 43 insurers reviewed) said it was important to note that much has been done since the review was undertaken to improve systems and customer outcomes, and that it would work proactively with the FMA to address all areas of concern before the COFI regime is in force.

The concerns identified in the FMA’s update include: • poor product and policy-holder review processes, • lack of clear line of sight on commissions paid to intermediaries, including whether they are fair and reasonable to customers, and understood by customers, • insufficient oversight of how intermediaries are selling and managing the insurers’ products, 6

CO R PO RA TE RE PO RTE R • lack of appropriate levels of board support for the development of an organisational culture that promotes good conduct, rebalances shareholder and customer interests, and sets an appropriate conduct risk appetite, and • not enough measures in place to ensure remediation activity is completed promptly and addresses the root cause of issues.

Read more in the FMA’s Insurance conduct and culture: Fire and general insurers update. Also see our publication The Big Picture: Financial Markets – are you prepared for a conduct regulation regime? for more information on how the COFI regime will apply to the insurance sector.

FMA continues relief for employee share purchase schemes The FMA has extended the relief provided under the Financial Markets Conduct (Employee Share Purchase Schemes) Exemption Notice 2016 which is due to expire in August for a further five years under the Financial Markets Conduct (Employee Share Purchase Schemes) Exemption Notice 2021.

As under its predecessor, the 2021 notice, which comes into force on 6 August 2021, extends the relief provided under the Schedule 1 exclusion of the Financial Markets Conduct Act 2013 (FMC Act) for shares offered under employee share purchase schemes to: • offers made to employee trusts and relatives, and • offers made under share schemes that have an ancillary debt or managed investment scheme component, for example saving scheme securities.

It also addresses difficulties with the operation of the exclusion in relation to the 10 percent limit on the number of equity securities that can be issued or transferred in a 12-month period where the employer provides employees interests by creating equitable interests in existing voting securities.

In response to requests from market participants, the FMA consulted on whether the new notice should apply to offers of options to acquire equity securities by way of transfer, and also be extended for unique offerings of non-voting shares under an employee share purchase scheme that go beyond the 10 percent.

However, these proposed modifications have not been adopted in the new notice.

FMA provides updates on its review of FMC Act class exemption notices Last year the FMA consulted on its review of 16 class exemption notices which are due to expire between August and December 2021.

These notices, which were put in place to support the regime under the Financial Markets Conduct Act 2013 (FMC Act) when it was first implemented, provide solutions to various FMC Act regime compliance issues that are unique to particular classes of market participants.

The FMA has made various announcements on its website as it makes decisions on whether to grant continued exemption relief. In the latest round it has confirmed that it will grant relief on substantially the same basis as under the following four existing notices: • Financial Markets Conduct (Overseas FMC Reporting Entities) Exemption Notice 2016.

• Financial Markets Conduct (Overseas Registered Banks and Licensed Insurers) Exemption Notice 2020.

• Financial Markets Conduct (Securities Offered under Securities Act 1978 Exemptions Recognising Overseas Regimes) Exemption Notice 2016.

• Financial Markets Conduct (Overseas Banks Offering Simple Debt Products) Exemption Notice 2016.

However, it has decided not to provide continued relief for overseas listed issuers under the Financial Markets Conduct (Disclosure Using Overseas GAAP) Exemption Notice 2016, on the basis that there has been little evidence of this notice being relied on. That notice expires on 3 November 2021.

The Financial Markets Conduct (Incidental Offers) Exemption Notice 2016 and the Financial Markets Conduct (Recognised Exchanges) Exemption Notice 2016 are now the only remaining notices that the FMA is still to release a decision on.

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FMA publishes new guide for financial advice providers’ full licence applications The guide is for businesses and individuals intending to apply for a Financial Advice Provider (FAP) Full Licence.

It explains the FMA’s expectations as a regulator, the polices and processes that need to be in place to comply with the Financial Markets Conduct Act 2013 and regulations, and the criteria which need to be met to be eligible to apply for a full licence.

From 16 March 2023 a person or firm can only provide regulated financial advice to retail clients if they have been granted a full FAP licence, or if they are a Financial Adviser, Nominated Representative or Authorised Body under another FAP’s approved full licence.

New guidance for FAPs on cyber resilience The FMA has published a new Information Sheet Developing cyber resilience for financial advice providers to assist small and medium-sized financial advice providers (FAPs) with enhancing the security and resilience of their technology systems.

Under the new financial advice regime, FAPs are subject to a set of standard conditions for full FAP licences, which include requirements around business continuity and technology systems. The FMA considers cyber resilience fundamental to information security and continuity, but recognises that it should be proportionate to the size and structure of the FAP’s operational environment, and suited to the nature, scope, complexity and risk profile of its products and services.

Temporary relief from certain regulatory reporting obligations The FMA is providing temporary relief to give some businesses additional time to comply with certain regulatory reporting requirements, in response to a shortage of auditors in New Zealand.

Relief is being provided through a ‘no-action’ approach that gives eligible entities (such as issuers and custodians and managers of registered schemes) affected by the auditor shortage a one-month extension to file their audited financial statements and comply with certain related reporting deadlines and other audits or assurance engagements. The relief is available for eligible entities with balance dates between 31 March 2021 and 31 December 2021, and some conditions apply. Entities will still need to prepare financial statements within the usual four-month timeframe.

Businesses may need to engage with other regulators (e.g. the Reserve Bank of New Zealand or NZX) if they need an extension in relation to other obligations.

Further details are available on FMA’s website.

FMA review findings and guidance on the filing of financial statements The FMA has released a report which summarizes the key findings and insights from its monitoring review of financial reporting filing obligations for FMC reporting entities. The report also provides guidance and sets expectations for future reporting periods Under the Financial Markets Conduct Act 2013, the FMA is responsible for monitoring compliance with financial reporting obligations, including the requirement that FMC reporting entities lodge financial statements with the relevant registrar.

In 2020, the FMA issued two infringement notices and one warning letter to FMC reporting entities and their directors. The FMA also filed criminal charges against a director for alleged disclosure and financial record keeping breaches across multiple companies. This included alleged failure to file financial statements for a number of years.

The report also provides details on the number of entities which relied on the COVID-19 financial reporting class exemption which applied to regulated entities with balance dates between 31 December 2019 and 31 July 2020.

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FMA Information Sheet updated on the FMC Act lender responsibilities exclusion This information sheet explains the circumstances that may exclude a lender from some Financial Markets Conduct Act 2013 (FMC Act) obligations related to financial advice.

The exclusion applies only to consumer credit contracts and certain credit-related insurance contracts.

Report on FMA’s MIS liquidity risk management review The FMA has released a report which presents its findings from an analysis of the 2020 self-assessment FMA survey completed by regulated entities on their MIS liquidity stress testing practices for a two-year period ending 31 December 2019.

The report is considered by the FMA to be a useful starting point for establishing, updating and maintaining liquidity stress testing frameworks, processes and procedures for any MIS.

New FMA levies came into force on 1 July 2021 New FMA levies which came into force on 1 July affect a number of transactions on the Companies, Disclose and Financial Service Providers Registers. The changes are part of the government’s plan to increase the FMA’s budget to help it fulfil its responsibilities as the financial markets regulator.

Details of the changes are available in the respective register links below: • Companies Register • Disclose Register • Financial Service Providers Register

New overseas investment provisions in place On 5 July 2021 several changes to the overseas investment regime came into force under the Overseas Investment Amendment Act 2021 and the Overseas Investment Amendment Regulations 2021.

The changes are largely positive for investors, with much more streamlined processes for the main types of consent applications. In particular, they include welcome changes to the “national interest test" as it applies to non-New Zealand government investors, which, since its introduction last year, has captured a much broader group of investors than intended.

Overview of the key changes The key changes include: • Removing consent requirements for investors making additional, incremental investments that do not result in a material change in ownership or control. A material change in ownership or control would be a change that results in an investor's ownership or control interest meeting or exceeding 25%, 50%, 75% or 100%.

• Simplifying the consent process for non-New Zealand government enterprises, such as pension funds, looking to invest in New Zealand, by o

increasing the national interest ownership threshold for foreign government investors from 10% to 25% and only aggregating for the purposes of the 25% threshold where government investors are from the same country, and

o

providing a pathway for certain passive foreign government investors to be exempt.

• Allowing repeat investors to become 'pre-verified', making consecutive applications for consent much more efficient. This will also create material advantages for repeat investors participating in competitive bid processes.

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CO R PO RA TE RE PO RTE R • Removing certain widely-held bodies corporate that are both New Zealand incorporated and New Zealand listed issuers from the definition of “overseas person”.

• Providing a standing consent for managed investment schemes that are New Zealand listed issuers (as that is defined in the legislation) to avoid the need for New Zealand listed managed investment schemes (which are fundamentally New Zealand entities) to apply for consent to buy sensitive New Zealand assets.

• Removing lease transactions in sensitive land that are less than 10 years (an increase from the existing three years).

New requirement for tax information There is also now a requirement to include certain tax information in applications for consents to make an overseas investment in significant business assets. This includes a requirement for a description of activities, the capital structure of the investment (for example, whether the investment is likely to involve the use of a hybrid arrangement or entity covered by subpart FH of the Income Tax Act 2007), and the likely nature and extent of any arrangements likely to be covered by the rules on transfer pricing arrangements under that Act. Other changes now in force On 7 June 2021, the temporary Emergency Notification Regime was replaced by a more targeted National Security and Public Order notification regime (NSPO) under section 52 of the Overseas Investment (Urgent Measures) Amendment Act 2020 (and the Overseas Investment (Commencement of Permanent Call-in Regime) Amendment Regulations 2021).

The NSPO requirement focuses on a narrower range of overseas investment transactions that pose significant national security and public order risks that would not usually be subject to Overseas Investment Office (OIO) screening. Notifications are mandatory for some investments (and voluntary for others) in ‘Strategically Important Businesses’ or their assets (such as ports and airports, water infrastructure, electricity generation distribution businesses, telecommunications infrastructure, and systemically important financial market infrastructure). From 29 July 2021, overseas investors investing in registered banks with minimum assets of NZ$80 billion also are likely to be subject to the NSPO, if other criteria are met and any relevant exemptions do not apply.

Further details on the new NSPO regime are discussed in our article here.

Changes still to come Other changes, coming into force on 24 November 2021, include: • the introduction of statutory timeframes for consent applications, • higher benefit thresholds will be required to be met for consent applications involving farm land, • tightened rules for farm land advertising, which includes a new requirement that farm land be advertised in New Zealand before any agreement to sell the land to an overseas person is entered into (currently, advertising must only take place before such an acquisition is completed), • changes to consent applications involving fresh water and marine areas (formerly ‘special land’), and • further protection of sites of cultural importance to Māori.

The ‘benefit to New Zealand test’ for overseas persons who seek to acquire ‘sensitive land’ in New Zealand is also subject to changes, but a date is yet to be determined for them. They are expected to be in place by late 2021 (or, at the latest, by 24 May 2022). Those changes include: • replacing the ‘with or without’ analysis (comparing the likely future state of New Zealand with the proposed investment, versus without the investment) with a ‘before and after’ analysis, requiring ministers to compare instead the likely result of the investment with the existing state of affairs – which will generally be an easier threshold to satisfy, and • streamlining the process by scrapping 18 of the current 21 rigid benefit categories and replacing them with three new broader benefit categories, allowing the OIO and ministers to take a more flexible approach to assessing benefits.

You can read more on these changes in our article here.

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Takeovers Panel consults on changes to takeovers legislation The Takeovers Panel has published a consultation paper in which it is proposing to recommend amendments to various provisions in the Takeovers Code, as well as to other legislation. The consultation closes on 27 August 2021.

If the proposed recommendations are implemented as consulted on, the key points to note are as follows: • The Code’s 12-month look-back period that currently applies to all listed code companies after they delist will no longer apply following a full takeover offer or scheme of arrangement (or other “take private” transaction) that results in a listed company being controlled by one shareholder or two or more shareholders acting jointly or in concert for the purposes of the transaction.

• The Panel is considering updating Rule 64 of the Code to reflect the more comprehensive prohibitions against misleading or deceptive conduct in the Financial Markets Conduct Act 2013 (which includes a restriction on unsubstantiated statements).

• A clarification to the Code will be made to give the Court the power to grant a mandatory injunction ordering that a person take a positive action in the context of a potential breach of the Code.

• The Code would be amended to place a direct obligation on the bidder to have sufficient committed debt and equity funding in place to meet its commitments under a takeover offer, and in respect of any liabilities incurred in respect of the offer, as well as requiring specific disclosures regarding the funding.

Currently, the Code simply requires that the bidder includes a confirmation that sufficient resources will be available.

• Changes would be made to the remedy for non-payment of consideration under the Code so that the Code itself requires payment of consideration at the relevant time (meaning a failure to do so would be a breach of the Code, rather than just a contractual remedy for the shareholder).

The Panel is also consulting on issues relating to: • whether Rule 47(4) of the Code should be clarified so that communications that are only to one shareholder (or a small group of shareholders) are not required to be provided to the Panel unless requested by the Panel; and to require that, in respect of call scripts, a final version of the call script is provided to both the Panel and the other party (i.e., the bidder or the target, as applicable), • the process for dealing with unclaimed acquisition consideration, • the disclosure of derivative interests in the context of a takeover, and • the uncertainty around existing security interests for shares acquired by way of a scheme under section 236A of the Companies Act 1993 or compulsory acquisition under the Code.

Consultations on further reforms for the NZ ETS The Government is reviewing industrial allocation (also known as free allocation) in the New Zealand Emissions Trading Scheme (NZ ETS), and is also seeking submissions on proposals to address various market governance issues.

The first consultation paper “Reforming industrial allocation in the NZ ETS” looks at both short term issues to address over-allocation (with evidence that some industries are receiving allocations greater than intended to address leakage), and also questions about the long-term direction of industrial allocation to start a public conversation on alternative measures, such as carbon border adjustment mechanisms.

The results from this consultation, alongside further policy analysis, will inform advice to ministers about policy changes to industrial allocation. These changes are likely to be progressed through an amendment to the Climate Change Response Act to be introduced in 2022, and later through changes to the industrial allocation regulations. Any actual changes to allocations or eligibility are unlikely to take effect until 2024.

A parallel consultation “Designing a governance framework for the NZ ETS” seeks feedback on: • the seven potential market risks in the scheme (which include governance of advice, governance of trading in the secondary market, and governance of market conduct), 11

CO R PO RA TE RE PO RTE R • regulatory and non-regulatory options to address these risks, and • options for appointing a market regulator to oversee the NZ ETS (at present there is no regulator overseeing all aspects of the ETS).

Submissions on both consultation papers close on 17 September 2021.

Final advice released by the Climate Change Commission The much-anticipated advice by the Climate Change Commission was tabled in Parliament on 9 June, and stressed both the urgency around action along with the need to lay foundations to support deeper emissions reductions long-term.

The Government has until 31 December to respond to the advice with its emissions reduction plans for the periods 2022-2025, 2026-2030, and 2031-2035.

The advice was released in a 400-page report called Ināia tonu nei: a low emissions future for Aotearoa, which reiterates the Commission's position that New Zealand is not on track to meet its targets with current policy settings. The advice highlights the widespread changes that will be needed to effect the transition to a low-carbon economy, but also describes transformational and lasting change as “both necessary and possible" – stating the technology and tools needed for New Zealand to reach its climate targets already exist.

The Commission has set out its expectation that the Government's plans will include the date by which each policy or action will be initiated, implemented and completed by, along with milestone reporting periods and reporting on matters such as budgeting and resourcing.

For more information on the recommendations set out in the Commission’s final report, see our article here.

Whilst some may consider the Climate Change Commission’s recommendations to be requiring decarbonisation at a pace that is too fast, this view is not shared by the Lawyers for Climate Action NZ (LCANZI)). On 1 July 2021, LCANZI filed High Court proceedings seeking judicial review of the Commission’s final advice, with a view to clarifying what the Climate Change Response Act 2002 (CCRA) requires of the Commission and the Minister for Climate Change in setting emissions budgets. The grounds for the action are that the Commission’s advice does not comply with the CCRA or with New Zealand’s obligations under the Paris Agreement (an international agreement to strengthen the global response to the threat of climate change under the United Nations Framework Convention on Climate Change, which came into force on 4 November 2016).

LCANZI alleges in its statement of claim that in the Commission’s final advice: • the recommended emissions budgets do not meet the Commission’s own calculation of what is consistent with limiting warming to 1.5°C, as required by the Paris Agreement, • the accounting methods are inconsistent with the Climate Change Response Act, and make the budgets look more ambitious than they really are, • the calculations for the country’s nationally determined contribution (NDC) under the Paris Agreement make a logical and mathematical error - and understate the required reductions in greenhouse gases, and • the Commission is relying on the uncertain prospect of New Zealand being able to use offshore mitigation to reduce their emissions, instead of pursuing domestic emissions reductions and domestic removals at the level required to meet the Paris Agreement obligations.

The relief being sought includes requiring the Commission to re-consider the parts of its advice that relate to New Zealand’s 2030 NDC under the Paris Agreement and the proposed first three emissions budgets in accordance with the law as set out in the Court’s judgment.

Further details are available on LCANZI’s website.

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New AML/CFT regulations for nominee directors and nominee general partners The Anti-Money Laundering and Countering Financing of Terrorism (Requirements and Compliance) Amendment Regulations 2021 introduce a new obligation to conduct customer due diligence for nominee directors and nominee general partners.

The new regulations, which came into force on 9 July 2021, require a reporting entity: • to obtain information about whether a person on whom it is conducting customer due diligence under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) has nominee directors and nominee shareholders, and • to conduct enhanced customer due diligence under the AML/CFT Act if it establishes a business relationship with a customer that has a nominee director or a nominee general partner.

They also replace the two-year time period during which a reporting entity must ensure that its risk assessment and AML/CFT programme are audited under section 59(2) of the Act with a new default time period of three years, with the possibility of a four-year time period upon notification by a reporting entity’s AML/CFT Supervisor.

Reporting entities are expected to comply with the new regulations as soon as possible. However, in recognition that reporting entities will need to amend their processes and procedures (and potentially systems) a transitional compliance period applies until 29 April 2022.

Further details on how these new regulations apply to FMC reporting entities are available in a FMA guidance note and details on the transitional compliance period are available here .

Recent amendments to existing AML/CFT regulations A series of amendments to the AML/CFT Regulations came into force on 9 July 2021.

This included amendments to two regulations that are a key part of the AML/CFT system: •

Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Regulations 2011.

•

Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Regulations 2011.

Under the Anti-Money Laundering and Countering Financing of Terrorism (Exemptions) Amendment Regulations 2021 the 2011 regulations have been amended to: • prevent the use of structuring in relation to stored value instruments to avoid obligations under the AML/CFT Act, • amend the exemption provided to related entities so that it applies to entities that are not body corporates, and • insert new regulations relating to exemptions for relevant services provided in respect of courtappointed liquidations and certain third party transactions, and to a subject of a Commissioner of Police's order or production order, as well as a number of amendments to remove redundant provisions and clarify various aspects of the regulations.

Under the Anti-Money Laundering and Countering Financing of Terrorism (Definitions) Amendment Regulations 2021 various provisions in the principal regulations have been clarified, and amendments: • prescribe that related limited partnerships may be members of a designated business group, • change the definition of ‘debit card’ and prevent structuring in relation to stored value instruments for the purposes of the application of the definition of occasional transaction, and • change customer due diligence time frames for real estate agents engaging in commercial leases.

The FMA has summarised both of these amendment notices for reporting entities it supervises, and set out the impact of those amendments for those entities in its July 2021 guidance: Anti-Money Laundering and Countering Financing of Terrorism - regulations update.

The Anti-Money Laundering and Countering Financing of Terrorism (Cross-border Transportation of Cash) Amendment Regulations 2021 also replaces the prescribed form for a border cash report in the Schedule of the 2011 principal regulations with a list of the prescribed information that the report must contain.

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New guidance from the AML/CFT Supervisors The AML/CFT Supervisors have updated their guidance on identity verification.

Their latest Explanatory Note: Electronic Identity Verification Guideline (July 2021) replaces the 2017 guidance note. It includes additional content identifying commonly used electronic sources in New Zealand. It also sets out the AML/CFT Supervisors’ expectations when they review or inspect a reporting entity’s Electronic Identity Verification (EIV) procedures, policies and controls.

In addition, a new factsheet Birth Certificates with Redacted Information confirms the AML/CFT Supervisors’ position that certain details may be redacted by a customer from their birth certificate if it is used for identity verification purposes when conducting customer due diligence.

Terminating a business relationship under the AML/CFT Act A recent High Court judgment has provided guidance on the requirements of terminating a business relationship when an AML/CFT reporting entity is required to do so under the AML/CFT Act. The judgment, Arjang v NF Global Limited [2021] NZHC 395, is likely to be of considerable practical assistance to any reporting entity in New Zealand or overseas that has to terminate a business relationship under the AML/CFT Act or equivalent legislation.

The Court noted that termination of a business relationship means that a reporting entity cannot continue to carry out transactions or other services for the customer, or charge them fees. However, past transactions do not need to be unwound. The customer retains their enforceable rights to any funds in their account, and the reporting entity must return those funds to the customer (or a source that they nominate).

Further details on this decision and the guidance the High Court provided on termination of a business relationship are published in our article here.

New Zealand Supreme Court reviews principles of contract interpretation In a judgment released last week, Bathurst Resources Ltd v L&M Coal Holdings Ltd, the Supreme Court reviewed and restated the principles relating to contract interpretation and implied terms.

In doing so, the Supreme Court rejected the Court of Appeal's approach, which had sought to narrow those principles by limiting the use of evidence from outside the contract to determine the meaning of the contract.

The Supreme Court also considered the test for implying an unwritten term into a contract. For many years this has been guided by a five-stage test set out in a 1977 decision of the Privy Council, BP Refinery.

However, that approach had arguably been overtaken by a new approach developed by the UK Supreme Court in 2009, which was in turn qualified by the UK Supreme Court again in 2015. The New Zealand Supreme Court sought to synthesize all of this case law, by saying that the BP Refinery approach continues to apply, but with “some qualifications".

For more detailed commentary on the judgment see our article here.

High Court upholds cap on liability in contract for professional services In a recent decision, CBL Insurance Ltd (Liq) v Harris [2021] NZHC 1393, the High Court has affirmed that a clause capping liability in respect of services provided by a professional service firm is effective, and required the plaintiff to limit their damages claim to an amount within the cap.

The judgment provides reassurance to the professionals and their firms who include caps in their terms of engagement, as these caps are often the subject of challenge. Further, the Court was prepared to find that the cap applied at a preliminary stage of the proceeding, before trial. This will increase the utility of such clauses, as parties can be more confident of their maximum liability going into a trial, and make prospective plaintiffs more realistic about what they can claim. It will also assist in any settlement discussions before trial.

More details on this decision are available here.

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Government has agreed to establish a consumer data right framework The Government has agreed to establish a new legislative framework for a consumer data right in New Zealand.

A consumer data right regime would establish an economy-wide, consumer-directed data transfer system that allows consumers to access certain data held about, or related to, them by designated organisations, and direct that data to be transferred to accredited third parties. The regime will be rolled out on a sectorby-sector basis, with the Government designating individual markets, industries and sectors to which it applies.

A similar consumer data right regime was introduced in Australia in 2019, with banking (open banking) and energy as the first sectors to be designated.

The Government aims to make a second round of detailed policy decisions on the consumer data right framework later in 2021, and will look to introduce legislation in 2022.

Further information is available in our recent article and on MBIE’s website.

Some final tweaks to the Fair Trading Amendment Bill Further amendments to the Fair Trading Amendment Bill have been introduced through a Supplementary Order Paper at the Committee of the whole House stage in June.

The two key changes proposed by the bill: • extend the existing prohibition in the Fair Trading Act 1986 against unfair contract terms in standard form consumer contracts to include standard form business-to-business contracts valued under NZ$250,000 per year (small trade contracts), • introduce a new prohibition against unconscionable conduct in trade.

At the Committee of the whole House stage the government introduced further amendments to the Bill through a Supplementary Order Paper. This included various amendments to the new protections against the use of unfair terms in small trade contracts. One of the key changes would remove the concept of related parties from the definition of trading relationship, which means that only contracts that are between the same parties would count for the purposes of assessing whether the trading relationship between the parties will be worth NZ$250,000 or more in any given year. Contracts between parties related to those parties will not count towards the NZ$250,000 threshold.

A further change provides that the new protections against unfair contract terms in small trade contracts do not apply to relevant insurance contracts entered into before 1 April 2025 or, if an earlier date is appointed by the Governor-General by Order in Council, before that earlier date. This is intended to enable the new protections’ roll-out in the insurance industry to be co-ordinated with the insurance contract law review currently being carried out by the Government, so that insurers do not need to review their contracts twice.

The Bill is expected to proceed to its third reading when Parliament resumes in August. Following its assent, the Bill provides for a transitional period of one year before the key changes come into effect.

For more information, see our previous updates on the Fair Trading Amendment Bill covering: • submissions on the Bill, • the introduction of the Bill into Parliament, • the MBIE's announcement of proposed reforms, and • what constitutes an “unfair contract term".

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New certification requirement for lenders and mobile traders Lenders providing consumer credit, and mobile traders selling on credit, will soon need to be certified by the Commerce Commission to do so – unless already licensed by the Financial Markets Authority or Reserve Bank of New Zealand.

The certification requirement is one of a number of changes the Government has made to the Credit Contracts and Consumer Finance Act 2003 to provide greater protection to borrowers.

From 1 October 2021 if an entity registers to provide these services, that entity must apply for certification that its directors and senior managers are ‘fit and proper’ persons to perform their roles, meaning they are financially sound, honest, reputable, reliable, and competent.

However, if the entity is already registered on the Financial Service Providers Register (FSPR) on 30 September 2021, it does not need to be certified until it completes its next annual FSPR confirmation.

Read more on the FSPR website about applying for certification.

Due diligence guidance for consumer credit providers The Commerce Commission has finalised its guidance for directors and senior managers of consumer credit providers and mobile traders on how to comply with the new due diligence duty.

From 1 October 2021 directors and senior managers of lenders, including mobile traders selling on credit, will need to exercise due diligence to ensure their business complies with its duties and obligations under the Credit Contracts and Consumer Finance Act 2003.

The Commission’s due diligence guidance explains which directors and senior managers are subject to the duty of due diligence and provides information to help them understand what it means for them.

Industry regulation and regulatory control NZCC releases draft report on competition in the retail grocery sector In November 2020, the Government asked the NZCC to look at whether competition in the grocery industry was working well and, if not, what could be done to improve it. The NZCC’s draft report (released on 29 July 2021) has found that competition is not working well for consumers in the retail grocery sector, noting that if competition was more effective, retailers would face stronger pressures to deliver the right prices, quality and range to satisfy a diverse range of consumer preferences. Based on its preliminary findings, the NZCC has developed a variety of options for recommendations to improve competition. This includes increasing wholesale access to a wide range of groceries at competitive prices to make it easier for new competitors to enter or existing independent retailers to expand, and making land more available through changes to planning laws and restrictions on the use of covenants. Information relating to the market study, including an executive summary, NZCC’s full draft report, external reports it commissioned for the study, and infographics on the draft findings, options for recommendations and themes from its consumer survey conducted in March 2021 are available on NZCC’s website. Comments on the draft report are due by 26 August 2021. The NZCC’s final report is required to be published by 23 November 2021.

NZCC releases performance analysis of gas distribution businesses The NZCC has published information to help consumers and other interested stakeholders understand the performance of the four regulated gas distribution businesses, as it prepares to consult on a new price and quality path due to take effect from October 2022. The information allows consumers to compare the performance of the gas distributors as well as providing an overall snapshot of the sector across a range of measures. It includes revenue and profitability, capital and operating expenditure, asset condition, and network reliability and service.

NZCC updates framework for reviewing Fonterra’s milk price calculation The NZCC has updated its approach paper outlining the framework it applies when reviewing both how Fonterra sets its annual base milk price and the Milk Price Manual used to set the base milk price. The update takes into account changes to the Dairy Industry Restructuring Act that came into effect in June.

The Act requires the NZCC to conduct two separate reviews of Fonterra’s base milk price setting each 16

CO R PO RA TE RE PO RTE R dairy season. At the start of each season, the NZCC reviews Fonterra’s methodology for calculating its base milk price, as set out in Fonterra’s Farmgate Milk Price Manual. The legislation also requires the NZCC to review the base milk price calculation at the end of each season. The paper detailing the NZCC’s approach is on its website.

NZCC engages with fuel industry ahead of new regulatory requirements The NZCC has released an open letter to the fuel industry outlining the NZCC’s role and expectations of fuel businesses ahead of a new regulatory regime taking effect on 11 August 2021. The letter comes after the Ministry of Business, Innovation and Employment published regulations further detailing the requirements on fuel businesses under the Fuel Industry Act 2020. An infographic explaining the new regulatory regime is on the NZCC’s website.

Mergers and acquisitions Statement of Issues released for Taranaki By-Products’ application to increase its shareholdings in Lowe joint ventures The NZCC has published a Statement of Issues relating to the clearance application from Taranaki ByProducts Limited for it, or a related company, to increase its shareholdings in three joint ventures with the Lowe Corporation (Tuakau Proteins Limited, Hawkes Bay Protein Limited and Jackson Transport Limited).

The Statement of Issues can be found on the NZCC’s case register.

Statement of Unresolved Issues released for Can Plan/Nelmac clearance application The NZCC has released a Statement of Unresolved Issues relating to an application from Can Plan Nelson, seeking clearance to acquire certain assets of Nelmac Limited’s waste collection business, which trades as Betta Bins. The Statement of Unresolved Issues can be found on the NZCC’s case register.

NZCC grants clearance for Assa Abloy NZ to acquire NZ Fire Doors The NZCC has granted clearance to ASSA ABLOY New Zealand Limited (Assa Abloy NZ) to acquire all of the shares in NZ Fire Doors Limited (NZFD). Both Assa Abloy NZ (through its subsidiary Pacific Door Systems Limited (Pacific Doors)) and NZFD manufacture and supply fire-rated doors and windows to the construction industry. A public version of the written reasons will soon be made available on the NZCC’s case register.

Concrete Group subsidiary cleared to acquire Drymix The NZCC has granted clearance to Dunlop Drymix Limited, a subsidiary of the Concrete Group Limited, to acquire the assets and business of six companies that collectively trade in New Zealand as Drymix. Each of the Drymix companies were placed into receivership in mid-2020. Central to the NZCC’s decision was its determination that there was no realistic prospect that Drymix would be sold to an alternative purchaser who would supply bagged concrete and mortar products in competition with the Concrete Group.

NZCC clears overlap in roofing tiles The NZCC has granted clearance to IKO Industries Limited to acquire all of the shares of Ross Roof Group Limited. IKO and Ross Roof both supply steel roof tiles that are predominantly used on residential houses and are better known in New Zealand by their respective brands, Gerard and Metrotile. The NZCC found that the merged firm would face sufficient competition from long-run steel roofing suppliers such as Dimond, Metalcraft, Roofing Industries and Steel & Tube, and from smaller suppliers of steel roof tiles, to constrain its ability to raise prices, reduce service quality or coordinate their behaviour.

Statement of Unresolved Issues released for Trade Me’s application to acquire homes.co.nz The NZCC has released a Statement of Unresolved Issues relating to Trade Me Limited’s application for clearance to acquire PropertyNZ Limited, which owns and operates the homes.co.nz website. The Statement of Unresolved Issues can be found on the NZCC’s case register. The NZCC is currently scheduled to make a decision on the application by 6 August 2021.

Are Media Limited seeks clearance to acquire Ovato Retail Distribution NZ Limited The NZCC has received a clearance application from Are Media Limited to acquire 100% of the shares in Ovato Retail Distribution NZ Limited (ORD NZ). Are Media Limited is the New Zealand subsidiary of Australian company Are Media Pty Limited. It publishes a range of magazines for Australian and New Zealand audiences, including titles such as the ‘The New Zealand Listener’, ‘Your Home and Garden’, ‘Woman’s Day’ and ‘Woman’s Weekly’. ORD NZ is New Zealand’s largest distributor of magazines to retailers such as supermarkets, service stations and bookstores. It distributes magazines for publishers such as Are Media and Stuff and is ultimately owned by ASX-listed Ovato Limited.

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Consumer issues Strandbags charged over discounting practices The NZCC has filed seven representative charges under section 10 of the Fair Trading Act against retailer Strandbags Pty Limited over its discounting and sales practices. Strandbags is an Australasian wide retailer of handbags, wallets, luggage, backpacks and business bags. The NZCC alleges that between July 2018 and January 2020 Strandbags’ representations about significantly discounted or special prices were liable to mislead the public.

NZCC finalises due diligence guidance for consumer credit providers The NZCC has finalised its guidance for directors and senior managers of consumer credit providers and mobile traders on how to comply with the due diligence duty. From 1 October 2021 directors and senior managers of lenders, including mobile traders selling on credit, will need to exercise due diligence to ensure their business complies with its duties and obligations under the Credit Contracts and Consumer Finance Act. The finalised due diligence guidance can be found on the NZCC’s website.

ASB to repay customers nearly $9million following NZCC warning The NZCC has warned ASB Bank Limited over likely responsible lending failures which resulted in borrowers being overcharged Early Repayment Adjustment fees. ASB self-reported the matter to NZCC, agreed to repay approximately $8.9 million to borrowers, and provided the NZCC with enforceable undertakings which explain how it will locate affected customers and make refunds to them. A copy of the warning letter and enforceable undertakings can be found on the NZCC’s website.

Euro Corporation fined $361,000 in last steel mesh case Euro Corporation Limited (Euro) has been fined $361,000 for making false or misleading and unsubstantiated representations relating to its earthquake grade steel mesh products, known as SE615.

Auckland District Court Judge M-E Sharp sentenced Euro on 14 charges brought by the NZCC under the Fair Trading Act. Euro pleaded guilty to making false or misleading and unsubstantiated representations for its SE615 steel mesh products which it marketed and sold as being earthquake grade steel mesh (known in the industry as 500E grade) between January 2012 and August 2015.

Telecommunications NZCC maintains regulation of three telco services to protect consumers The NZCC announced today it will keep regulation in place for three wholesale telecommunications services to continue to promote competition and protect consumers. The three wholesale services are number portability, interconnection with a fixed public switched telephone network and mobile colocation. Schedule 3 of the Telecommunications Act 2001 requires the NZCC to consider every five years whether there are reasonable grounds for deregulating a number of wholesale services that are listed under Schedule 1 of the Act. Only these three listed services were assessed in this review with the others scheduled for review throughout the five-year cycle.

NZCC announces draft decisions on price-quality regulation for Chorus and information disclosure requirements for fibre companies The NZCC has released for consultation its draft view on the maximum revenues Chorus should be able to earn from its fibre network over the first three years of the new regulatory regime that takes effect from 1 January next year, and the minimum quality standards Chorus should meet. The estimated price-quality path for Chorus would cap its revenues for three years from 1 January 2022 at $689 million in 2022, rising to $786 million in 2024, in line with forecast demand. The NZCC’s draft view on Chorus’ price-quality path, the information disclosure requirements, and proposed fibre input methodology amendments can be found on its website.

NZCC extends successful broadband performance programme The NZCC has extended its Measuring Broadband New Zealand programme for another year to continue to provide consumers and the industry with information about broadband performance. The one-year contract extension with independent testing partner SamKnows was announced alongside the release of its latest Autumn report, covering broadband performance across New Zealand in March 2021. The Autumn report confirms ongoing high levels of performance comparable to the previous Summer report.

The Autumn report and an online dashboard to explore the results in more detail are available on the NZCC’s website.

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CO R PO RA TE RE PO RTE R NZCC updates process to determine value of Chorus’ fibre network The NZCC has updated its process for determining the value of Chorus’ initial price-quality regulatory asset base (PQ RAB) following feedback from industry stakeholders. The value of Chorus’ initial PQ RAB, or its fibre network, is an important determinant of how much revenue Chorus can earn and the prices consumers will pay under a new regulatory regime starting at the beginning of 2022. The NZCC’s process update paper as well as further correspondence received from Chorus and the NZCC’s response are available on the NZCC’s website.

Mergers and acquisitions Salesforce and Slack deal not opposed The ACCC will not oppose the proposed acquisition of Slack Technologies, Inc. (Slack) by salesforce.com, Inc. (Salesforce). Salesforce is a global supplier of customer relationship management software. Slack is an enterprise collaboration platform, which enables users to engage in direct messaging, group channel messaging, document sharing and limited intra-organisation voice-and-video-calling. The ACCC found that Salesforce and Slack mostly supplied different software with distinct purposes, meaning there was minimal direct competitive overlap between the two parties.

Market behaviour Country Care, CEO and former employee acquitted of criminal cartel offences A jury in the Federal Court acquitted rehabilitation aids company The Country Care Group Pty Ltd, its CEO Robert Hogan and a former employee Cameron Harrison of eight criminal cartel offences. The charges related to alleged attempted price-fixing and bid-rigging involving the supply of assistive technology products used in rehabilitation and aged care, such as walking frames, bathroom aids and other similar items to assist people with disabilities. The case was the first contested criminal prosecution under the criminal cartel provisions of the Competition and Consumer Act, and the first to proceed to trial by jury.

Court dismisses ACCC case against NSW Ports The Federal Court has dismissed the ACCC’s proceedings against NSW Ports Operations Hold Co Pty Ltd and its subsidiaries Port Botany Operations Pty Ltd and Port Kembla Operations Pty Ltd (together, NSW Ports). The proceedings concerned agreements, known as Port Commitment Deeds, which were entered into as part of the privatisation of Port Botany and Port Kembla by the NSW Government in May 2013, for a term of 50 years. The Port Commitment Deeds oblige the State of NSW to compensate the operators of Port Botany and Port Kembla if container traffic at the Port of Newcastle is above a minimal specified cap.

Another 50-year deed requires the Port of Newcastle to reimburse the State of NSW for any compensation paid to operators of Port Botany and Port Kembla under the Botany and Kembla Port Commitment Deeds.

This reimbursement would effectively double the cost of moving a container at the Port of Newcastle.

ACCC takes action over alleged attempted cartel for National Gallery of Australia tender The ACCC has instituted civil proceedings in the Federal Court against Delta Building Automation Pty Ltd (Delta) and its sole director, Timothy Davis, for involvement in an alleged attempt to rig a bid in connection with a tender conducted by the National Gallery of Australia in Canberra. The alleged attempted cartel conduct occurred in late 2019, and relates to a tender for the replacement and ongoing maintenance of a building management system at the National Gallery. The case will be listed before the Federal Court at a date to be set.

Consumer issues Cheaper petrol at independent chains offers half a billion dollars in savings Independent petrol retail chains Speedway, Metro Petroleum, United, Vibe and FuelXpress had the cheapest petrol in Australia’s eight capital cities in 2020, a new ACCC petrol industry report reveals. The report shows the average range between the highest and lowest-priced major petrol retailer across the five largest capital cities (Sydney, Melbourne, Brisbane, Perth and Adelaide) increased to 11.4 cents per litre (cpl) in 2020, from 8.4 cpl in 2019. The ACCC’s analysis shows that motorists in Australia’s five largest

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CO R PO RA TE RE PO RTE R cities could have saved a combined total of nearly half a billion dollars ($485 million) in 2020 by switching from a variety of higher-priced to lower-priced major retailers.

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