The Intersection of Advertising and Antitrust in New Zealand

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Andrew Matthews, Gus Stewart, Jul 29, 2014

Advertising and antitrust have been inextricably linked in New Zealand since at least 1986. That year both the Fair Trading Act (which prohibits misleading and deceptive conduct) and the Commerce Act (the antitrust legislation) were enacted. Significantly, both pieces of legislation are enforced by the Commerce Commission (New Zealand’s antitrust regulator), fusing the enforcement of advertising and antitrust law. (Both pieces of legislation can also be enforced by third parties, which can be competitors or consumers.) Consistent with international developments, it appears that the Commission has increasingly seen its powers under the Fair Trading Act not to be just an independent responsibility, but as a vital tool to develop more competitive markets.

There is a range of other law relevant to advertising, which is perhaps less immediately obviously linked to antitrust, including the Trade Marks Act, Copyright Act, and the common law prohibition on “passing off.” Similarly, there is a raft of other consumer protection law, most notably the Consumer Guarantees Act, which can come into play in this area. For example, the Commission will frequently take enforcement action when consumers have been misled as to their statutory rights under the Consumer Guarantees Act, even though the Commission has no direct power to enforce that Act. (The Commission essentially has class action rights under the Fair Trading Act, which New Zealand does not have more generally.)

And there is one area where advertising law, in the sense of protecting IP rights, may have been sacrificed in order to foster competition. As a small, open economy the ability to allow parallel imports has been seen as enabling more competitive markets. IP rights holders and local distributors naturally do not favor this as it diminishes any market power they gain from those rights.

In the next two sections of this article we discuss (1) the Commerce Commission’s dual responsibility for enforcing advertising and antitrust laws, and (2) the intersection of advertising and antitrust in practice.