24.11.2021

Commerce Commission study announced for building supplies market

The Commerce Commission is set to undertake a market study into residential building supplies for major components of residential buildings 

On 22 November 2021 the Minister of Commerce and Consumer Affairs announced a market study to assess factors that may impact competition in the New Zealand market for the supply and acquisition of building supplies used for residential buildings.  These include flooring, insulation, roof, and structural and non-structural walls (both interior and exterior).  The study recognises that residential buildings play an important role in New Zealand’s construction industry as well as ensuring that the ever-growing housing supply can meet the demand. 

The full announcement can be accessed here.

Scope of market study into residential building supplies

As part of the announcement, the Minister has released Terms of Reference which describe the various factors that the Commerce Commission (Commission) must consider in carrying out the study.  These include, but are not limited to:

  • The structure of the residential building supply industry for key supplies covered by the study;
  • The nature of competition for these key building supplies (including industry pricing practices or acquisition requirements that are likely to impact competition); and
  • Impediments to the entry or expansion of new innovative building supplies, including “green” building supplies or novel prefabricated products.

In directing the Commission to carry out the study, the Minister has identified a number of factors the Government considers may be impacting competition, including:

  • A highly concentrated market for some building supplies;
  • A high level of vertical integration in the supply chain;
  • A lack of transparency in the pricing of building supplies, including the use of rebates and loyalty schemes; and
  • Difficulties faced by new building supplies entering the New Zealand market.

Next steps

The Commission will be required to engage with and send general information requests to a range of stakeholders in the building and construction industry as part of the study.  The indicative timeframe for the study is as follows:

December 2021Commission expected to release a Preliminary Issues Paper
Early 2022Information gathering / engagement with stakeholders
July 2022Draft consultation report issued by Commission
6 December 2022Final report to be made available

The findings of the study will help to inform any changes the Government wishes to make to enhance performance and public/consumer confidence in the residential building supply industry.  Although the Commission’s findings are non-binding, the market study was foreshadowed in Labour’s 2020 Election Manifesto, and the Government will be required to consider and respond to any recommendations made by the Commission within a reasonable time frame after the final report has been made available to the public.

This will be the third market study undertaken by the Commission, with the first market study taking place in December 2019 which looked into retail fuels, and the second market study (which is currently ongoing) looking into the retail grocery sector. 

We will provide a further update once the Preliminary Issues Paper has been released.  If you would like to discuss the Commission’s market study please get in touch with our Business Advice Team or Construction Team or your usual contact at Hesketh Henry.

 

Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

 

 

 

Do you need expert legal advice?
Contact the expert team at Hesketh Henry.
Kerry
Media contact - Kerry Browne
Please contact Kerry with any media enquiries and with any questions related to marketing or sponsorships on +64 9 375 8747 or via email.

Related Articles / Insights & Opinion

Force Majeure – Not A Get Out Of Jail Free Card
Woolworths Group Ltd v Twentieth Super Pace Nominees Pty Ltd [2021] NSWSC 344
17.06.2022 Posted in Trade and Transport
Payment Claims: Incorrect Due Date From Delayed Delivery
Nicholls Group Projects Ltd v Plan Design Build Homes Ltd
20.05.2022 Posted in Construction
Employment Court Deems Gloriavale Residents Employees
The definition of “employee” in the Employment Relations Act 2000 (ERA) can at times be tricky to navigate; recent cases involving builders, couriers, and uber drivers can attest to the issues tha...
18.05.2022 Posted in Employment
New proposals on modern slavery place higher responsibilities on NZ organisations
Over recent years, modern slavery has become a more prominent issue in New Zealand.
13.05.2022 Posted in Business Advice
Insurance Contracts Bill – submissions on exposure draft closing soon
As we reported in late February, the Ministry of Business, Innovation and Employment (MBIE) is seeking submissions on the exposure draft Insurance Contracts Bill.  Submissions close on 4 May 2022. MB...
20.04.2022 Posted in Insurance
Matariki and Fair Pay Agreements
Matariki Te Pire mō te Hararei Tūmatanui o te Kāhui o Matariki (Te Kāhui o Matariki Public Holiday Bill) received Royal Assent yesterday, and the new Act comes into force today – 12 April 20...
12.04.2022 Posted in Employment
A Landmark Change? – Proposed reform of the occupational regulation of engineers
Engineers engage in building work that is critical to public safety. Despite this, few restrictions are placed on who can carry out and supervise complex and specialised projects that require high levels of professional judgement, skill and technical competence.
07.04.2022 Posted in Construction
Send us an enquiry
For expert legal advice, please complete the form below or call us on (09) 375 8700.
  • This field is for validation purposes and should be left unchanged.
-->