Joint Buying In NZ: Understanding The Price-Fixing Exception

Joint buying can help small and medium businesses get better supply terms, but it is not a free pass under New Zealand competition law. A group of businesses may be able to negotiate a common supplier price, buy collectively, or use an intermediary to purchase stock without that pricing provision being treated as price fixing under section 33 of the Commerce Act 1986. But that exception is narrow and operates at the level of a particular provision, not the whole arrangement.

The real risk is that a sensible procurement discussion drifts into competitor conduct that is outside the exception, such as agreeing retail margins, allocating customers, coordinating bids, or limiting output. Even if one clause fits section 33, other parts of the arrangement can still raise issues under section 27 of the Commerce Act and other competition rules. That is why a buying group should be documented and managed around a tightly defined procurement purpose. This article is general information only and is not legal advice.

When Can A Joint Buying Provision Fall Within Section 33?

section 33 of the Commerce Act 1986 creates an exception for certain price-related provisions in a contract, arrangement or understanding. It does not say that every buying group is lawful. It says that a provision does not have the purpose, effect, or likely effect of price fixing if it falls within one of four limbs.

Those four limbs matter because they show the kinds of procurement structures the law recognises:

• Collective acquisition: a provision relating to the price for goods or services to be collectively acquired, directly or indirectly, by some or all of the parties.
• Joint advertising: a provision for joint advertising of the price for the resupply of goods or services acquired under that collective acquisition limb.
• Collective negotiation with individual purchasing: a provision for collective negotiation of price followed by individual purchases at the negotiated price.
• Intermediary title model: a provision for an intermediary to take title to goods and resell or resupply them to another party to the arrangement.

For SMEs, that means there is more than one possible structure. The group might place one pooled order. It might negotiate a supplier quote together but let each member place its own order. Or it might use a central vehicle or manager to buy stock and on-sell it to members.

The key point is that section 33 deals with a specific type of pricing provision connected to joint procurement. It is not a label you apply to a whole commercial relationship and move on.

What Section 33 Does Not Automatically Protect

The easiest way to misread section 33 is to assume that once businesses are buying together, anything they say about price is acceptable. That is not how the provision works.

A common supplier quote is different from a discussion about what each member will charge its own customers. If competing retailers negotiate a better wholesale price from a manufacturer, that may fit within section 33. If those same retailers then agree they will all keep a 40 percent margin, charge the same resale price, or avoid discounting, that is a different issue.

The Commerce Commission also identifies other prohibited cartel conduct that section 33 does not wash away, including:

• allocating customers or territories between competitors
• agreeing to coordinate bids or tenders
• agreeing to restrict output or supply

Exchanging future pricing intentions or customer information outside the procurement task is also a serious competition-law risk and may facilitate cartel conduct. Information exchange should not be treated as a separate cartel category merely because it is risky.

So a buying group agenda should not drift from supplier purchase terms into broader market behaviour. Calling the arrangement a co-op, consortium, joint venture, alliance, or purchasing club does not make it exempt.

It is also important to avoid a false purchase-versus-resale shortcut. Section 33(b) does include a limb for joint advertising of the price for resupply, but it is limited. It applies to joint advertising of the price for goods or services acquired under section 33(a). That does not mean every resale price discussion is outside competition risk, and it does not turn general retail price alignment into a safe practice.

How The Four Section 33 Limbs Work In Practice

Because section 33 is provision-specific, the practical question is not whether the group is generally collaborative. The question is whether the particular pricing provision sits within one of the four recognised categories.

1. Collective acquisition under section 33(a)

This limb covers the price for goods or services to be collectively acquired, directly or indirectly, by some or all parties. A straightforward example is a group of independent businesses approaching a packaging supplier together to negotiate one bulk price for cartons they all need.

2. Joint advertising under section 33(b)

This limb is narrower than many businesses expect. It relates to joint advertising of the price for resupply of goods or services that were acquired under the collective acquisition limb. The connection matters. It is not a general permission to discuss or coordinate unrelated future resale pricing.

3. Collective negotiation with individual purchasing under section 33(c)

This is often the most useful model for SMEs. The group negotiates a price together, but each member still buys individually at that negotiated price. In practice, that can be more workable than pooling all orders and funds, especially where members have different timing, volumes, or credit arrangements.

4. Intermediary taking title under section 33(d)

Some groups prefer a central intermediary to buy from the supplier, take title to the goods, and then resell or resupply to members. Section 33 recognises that model as well. But using an intermediary does not solve every risk by itself. You still need to look at what information flows through the intermediary and what decisions competitors are making together.

A Realistic Buying-Group Example

Example: Independent Hospitality Businesses Buying Cleaning Supplies

Six hospitality businesses in the same region want lower prices on cleaning supplies. They are not under common ownership, and some compete for the same customers.

They propose that one member gather each business's expected monthly volume for three standard product lines only, then approach suppliers for a group quote. Each business would remain free to order individually at the negotiated price. The agenda states that the meeting is limited to product specifications, expected combined demand for those items, supplier terms, and who will coordinate quote collection.

This illustrates the structure described in section 33(c): collective price negotiation followed by individual purchasing. Whether the actual pricing provision fits that limb, and whether the wider arrangement complies with competition law, still needs assessment.

Now add a second part to the same meeting. One member says that since everyone will have lower cleaning costs, the group should stop undercutting each other on service packages, keep minimum package prices above a set figure, leave certain hotel customers to particular members, and coordinate tender responses for larger venues.

That is a red flag. Those topics are not just about negotiating supplier purchase prices. They move into future retail pricing, customer allocation, bid coordination, and potentially output restrictions. Section 33 should not be treated as automatic protection for that conduct.

For an approach to discuss those out-of-scope cartel topics, the Commerce Commission's guidance is to object straight away, leave the discussion immediately and contact the Commission. Obtain independent specialist competition-law advice before any further involvement. If the group wants a more integrated joint venture agreement or broader collaboration, it should get specialist competition-law advice before going further.

Why Section 27 Still Matters

Even where a provision fits section 33, the arrangement still needs a broader competition-law check. Section 27 of the Commerce Act prohibits contracts, arrangements or understandings containing a provision that has the purpose, or has or is likely to have the effect, of substantially lessening competition in a market.

That matters because section 33 is not a blanket clearance for the whole buying group. A qualifying procurement-price provision may avoid being treated as price fixing, while other provisions or the overall arrangement may still need scrutiny under section 27.

For example, a buying group might have side terms about exclusive sourcing, restrictions on dealing with rival suppliers, coordinated supply volumes, or information-sharing practices that affect competition more broadly. Whether those features are acceptable depends on their actual competitive effect and purpose, not on the fact that the parties are also buying together.

Have the actual arrangement assessed before implementation, including its side restrictions and market context. A written buying-group agreement is not itself regulatory clearance. Any need for a formal competition-law process should be assessed by a qualified specialist.

What To Put In A Joint Buying Agreement Or Meeting Agenda

A buying arrangement should be documented around clear commercial limits. These are governance choices, not mandatory statutory clauses, but they help define the procurement task and reduce scope creep.

Useful questions to settle upfront include:

• Who negotiates with suppliers? Will one member collect quotes, will the group appoint a manager, or will an external intermediary handle discussions?
• Who places orders? Will orders be pooled, placed individually, or routed through an intermediary that takes title?
• What is the product and price scope? Identify the goods or services covered, and avoid vague authority to discuss wider pricing issues.
• What volume commitment, if any, is each member making? Is demand indicative only, minimum, capped, or binding for a period?
• What information will be shared? Limit access to what is genuinely needed for the procurement task, such as product requirements or volume ranges for specified items.
• Who can attend meetings? Keep attendance narrow and relevant, with a chair who can shut down off-topic discussion.
• What records will be kept? Use agendas and minutes that show the procurement purpose and note objections if discussions drift into risky topics.
• When must issues be escalated? Define when the group must pause and get specialist competition-law advice before continuing.

Businesses sometimes focus only on the agreement and overlook meeting discipline. In practice, both matter. A carefully drafted document can be undermined by a loose discussion where competitors share future pricing intentions, customer strategies, or tender plans.

Information Sharing Needs Particular Care

Joint buying often requires some information exchange, but that does not mean every exchange is acceptable. The Commerce Commission warns competitors not to exchange pricing, future production plans, customer information, or the markets they sell into where that goes beyond a legitimate exception.

For a buying group, that means the information shared should be as narrow as the procurement job requires. Examples may include standard product specifications, desired service levels, delivery requirements, and demand estimates for the items being sourced. The fact that information is aggregated, historical, or managed by one person is not, by itself, a legal answer.

The practical discipline is to ask, for each piece of information: why does the group need this to negotiate or administer the purchase? If there is no clear procurement reason, it probably does not belong in the room.

Records are also useful. Keep a written agenda, participant list, and minutes that reflect the limited purpose of the discussion. If someone approaches participants to discuss out-of-scope future resale prices, customer allocation, bid coordination or output restrictions, follow the Commission's guidance: object straight away, leave immediately and contact the Commission. Independent specialist advice is also important before re-engaging.

FAQs

Do We Need To Form A New Company Or Co-Operative To Buy Jointly?

No single structure is legally required for a joint buying arrangement. The parties might buy collectively, negotiate together and purchase individually, or use an intermediary that takes title. The right structure depends on the commercial model and competition-law assessment.

Can We Agree A Common Retail Price If We Bought The Goods Together?

Not automatically. Section 33 may cover a procurement-price provision and, in a limited way, joint advertising of the resupply price for goods or services acquired under the collective acquisition limb. That is not a general permission to align retail pricing, margins, rebates, or discounting strategies.

Is It Safe If We Only Share Limited Or Combined Data?

Not necessarily. There is no simple rule that information sharing becomes lawful because it is combined, older, or handled by another party. The question is whether the exchange is genuinely limited to what is needed for the buying task and whether the wider arrangement raises competition concerns.

Does A Written Agreement Solve The Competition Issue?

No. A written agreement can help define scope, roles, and escalation points, but it does not guarantee compliance. The conduct of the parties, the subjects discussed, and the actual market effect still matter.

When Should We Get Specialist Competition Advice?

You should get specialist advice before implementation if the group members compete with each other and the arrangement goes beyond a straightforward supplier price negotiation, uses an intermediary model, includes exclusivity or commitment terms, or risks discussion of resale pricing, customers, bids, or output. If a meeting turns to out-of-scope cartel topics, the Commission's guidance is to object straight away, leave immediately and contact it. Seek independent specialist advice before any further involvement.

Key Takeaways

• Section 33 is a provision-level exception for certain joint buying and related pricing arrangements, not a blanket exemption for the whole collaboration.
• The four recognised limbs are collective acquisition, joint advertising linked to acquired goods or services, collective negotiation with individual purchasing, and an intermediary taking title and resupplying.
• A common supplier quote can be very different from agreeing retail margins, allocating customers, coordinating bids, or limiting output, which remain serious competition risks.
• For approaches to discuss out-of-scope cartel topics, the Commission advises participants to object straight away, leave immediately and contact it. Obtain independent specialist advice before further involvement.
• Section 27 and other competition rules still matter, so a buying arrangement may need specialist competition-law review before it starts.
• Your documents and meeting agenda should narrowly define who negotiates, who orders, what products and volumes are covered, what information can be shared, and when the group must stop and escalate.

If you need help documenting a joint buying arrangement, supplier terms, procurement governance rules, or meeting protocols that stay focused on the commercial buying task, Sprintlaw's legal team can assist with the business documentation side. For competition-law eligibility or clearance decisions, you should obtain dedicated qualified advice before implementation. Call 0800 002 184 or email team@sprintlaw.co.nz.