NEW ZEALAND Law and Practice Contributed by: Christopher Young, MinterEllisonRuddWatts
the cartel prohibition is a criminal offence in New Zealand. • The entering into or giving effect to a provision of a contract, arrangement or understanding (Sec - tion 27), or a person with substantial market power from engaging in conduct (Section 36), which has a purpose, effect or likely effect of substantially lessening competition in a relevant market. The Commerce Act was amended from 5 April 2023 to remove historic protections for IP licensing agree - ments and the enforcement of statutory IP rights. Previously, Section 36 (3) provided that a business does not take advantage of market power simply by enforcing a statutory IP right (eg, a patent, trade mark or copyright). Section 45 (1) also previously added that the Act’s other prohibitions do not apply to the entering into of IP agreements (such as licences, set - tlement and coexistence agreements) in so far as they contained a provision that authorises something that would otherwise be prohibited by an IP right, or giv - ing effect to such provisions. This could extend to restraints on operating areas, first and third line forcing and other structural arrangements. These protections have now been removed, bringing New Zealand more in line with Australia (the Australian regime retains more flexibility as it has a permissive exception for “exclusive dealings”). There is still con - siderable uncertainty about the extent to which the removal of the IP exception will impact the exercise of IP rights in New Zealand. The Commerce (Promot - ing Competition and Other Matters) Amendment Bill was introduced in December 2025 and, at the time of writing, is proceeding through its final parliamentary readings. If passed, the proposed amendments to the Commerce Act will empower the Commission to grant “class-exemptions” for categories of low-risk con - duct, introduce an additional streamlined collaborative activity clearance process, and establish a statutory notification regime allowing businesses to proceed with certain types of conduct unless the Commission objects. These changes are expected to impact fran - chise models given the inherent issues following the 2023 removal of the IP safe harbour exception.
As can often be the model in franchise structures, if the franchisor is itself operating in the market and also selling goods or providing services in competi - tion with its franchisees, they may be competitors for the purposes of the Commerce Act. Often, franchise agreements contain restrictions which could therefore be viewed as potential cartel provisions (ie territorial, field-of-use or customer restraints). These provisions may breach the Commerce Act’s cartel prohibition or prohibition on anti-competitive arrangements unless one of the exceptions applies. Businesses with substantial market power which enforce statutory IP rights in a way that has the pur - pose and/or effect of substantially lessening compe - tition in a market are now subject to the Section 36 misuse of market power prohibition. An owner of IP rights might have a substantial degree of power in a market simply by virtue of its ownership of those rights, especially if there are no acceptable substitutes for the products/services the owner supplies in that market (for example, where the party is the first to patent a particular technology). The Commission considers this situation in its Guide - lines on the Application of Competition Law to Intel - lectual Property Rights, and notes that a refusal to license to a competitor or even a potential competitor may be a misuse of market power in some circum - stances. New Zealand law also prohibits suppliers from speci - fying a minimum resale price or taking actions to enforce a specified resale price (including inducing or attempting to induce another person not to sell at a price less than that specified). 6.2 Exclusive Territories and Competing Businesses The permissibility of including and enforcing exclu - sive territories in franchise agreements depends on the specific circumstances and the extent of restric - tions imposed. Exclusive territories in franchise agreements may trig - ger three prohibitions under the Commerce Act 1986: • the cartel prohibition;
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