ComCom outlines issues facing HP's application for an 'anti-competitive agreement'

ComCom outlines issues facing HP's application for an 'anti-competitive agreement'

HP aims to reinvigorate its online presence via an as-yet unnamed distributor

Credit: Rob O'Neill

The Commerce Commission has responded to HP's application for what it called an "anti-competitive agreement authorisation" in a paper outlining the preliminary issues raised.

Last month, HP asked the commission to approve a new online sales model requiring "resale price maintenance".

Under the new model, the vendor would control product and marketing strategies and, in particular, specify the prices for which a third party, in this case an as yet unnamed distributor, would sell the HP products to consumers.

The application related to sales through HP's online store, which had been operated by a partner but ceased trading last year, as well as to any future HP online marketplace stores.

However, resale price maintenance is prohibited under the Commerce Act 1986.

HP does not currently sell direct to consumers or businesses. Rather, the technology giant imports, distributes and supplies HP products in New Zealand through its network of distributors, retail channel partners and resellers for resupply to consumers and business customers.

That would remain unchanged apart from sales through the online store, HP said. 

Responding today, the regulator said it would authorise the proposed conduct if it was satisfied the conduct would "result, or be likely to result, in such a benefit to the public that the conduct should be permitted". 

"At this this stage of our investigation, our focus is to identify and assess the detriments and benefits that are likely to arise from the proposed conduct (and to the extent to which it is practicable, quantify the likely detriments and benefits)," the commission's paper said.

"In the Application, HP submits that the proposed conduct will not give rise to any detriments, and that even modest public benefits will therefore justify authorisation being granted. 

"HP anticipates limited supply chain impacts, that its distributors and resellers will similarly not be affected, and many significant competitors will remain in the market."

the regulator said it would consider if the proposed conduct could have any effects on competition that would create likely benefits or detriments. 

"For example, we will assess how, if at all, the conduct could affect competition between resellers of HP products. We will also assess if it could affect competition between HP's products and rival brands."

The commission is scheduled to make a decision on whether or not to authorise the conduct by 10 September but will publish a draft determination beforehand

The regulator is inviting interested parties to provide comments on the likely benefits and detriments of the proposed conduct by 22 April.

Last week, HP New Zealand reported increased revenue for the year to 30 October 2020 of a shade over $400 million, up from $378.7 million in 2019.

Net profit of $6.8 million was up from $5.2 million in 2019, however, losses on financial derivatives of $6.9 million took HP NZ's total income into the red by $40,000 compared with a $4.2 million profit in 2019.

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Tags HPonline salesCommerce Commission



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