Competition is good for consumers. It generally keeps prices down and encourages businesses to innovate. Competition between companies, including large competitors, is just part of doing business.  

However, if a business is so powerful that it has ‘substantial market power’, it is illegal for that business to do things that substantially harm competition. 

Usually, a business with market power is able to increase prices or reduce the quality of its products and services without losing customers.

There are many types of behaviour that might be illegal if a business with market power does them.

• Refusing to supply your business with an important product or service that you need to compete.
• Charging high prices so you can’t compete profitably in a market.
• Selling a product or service only when it is tied or bundled with another, so you can’t compete with the offer and customers can’t replicate the offer by buying the products separately. 
• Reducing prices below the cost of operating over a long period, or at strategic times, so businesses can’t compete.
• Exclusive contracts with customers or suppliers so you can’t access the products, services, or customers you need to compete. 

It is not illegal for a business to have market power or to charge high prices. It is conduct that prevents competitors competing and expanding their business that is a concern.

Check out more information for small businesses on the Commerce Commission website.

Information for small and medium businesses(external link) — Commerce Commission 

If a business with market power is causing harm to competition, the harm has to be substantial to be illegal.

Harm to competition might not be substantial if:

• the behaviour only lasts a short time
• the behaviour only affects you or only affects a small number of competitors
• the behaviour is frustrating but does not impact your ability to compete overall, for example, because you can get similar products or services from another company instead.

The Commerce Commission can investigate if a business with market power may have breached the law. 

They can take action, including going to court in the most serious cases.

The Commission receives many notifications each year, and unfortunately can’t investigate all of them.

They have criteria that guides them when prioritising cases.  

Enforcement criteria(external link) — Commerce Commission

If you think you might be affected, learn more on the Commerce Commission website and report your concerns. 

Information for small and medium businesses(external link) — Commerce Commission