The commission also recommended amending the Harassment, Telecommunications and Human Rights Acts to make it clear that they covered internet-based racial, sexual and other harassment and using a computer "for the purpose of disturbing, annoying or irritating any person" - an offence which now applies only to using a telephone. "I think they are simple, practical steps that could help," Judge MacLean said.
Today, the Herald launches a campaign to raise awareness of bullying in schools and investigate what more could be done to reduce it.
One survey of 9-year-olds in 35 countries found that New Zealand has the world's second-highest rate of school bullying.
It also has the world's highest suicide rate of young males aged 15 to 24 and the second-highest overall death rate of young people aged 10 to 24, reflecting a high road death toll as well as suicide.
A long-term study of 1265 people born in Christchurch in 1977 found that both adolescents who were bullied and the teenagers who bullied them were up to three times more likely than others to attempt suicide before age 30.
Judge MacLean has called several times for more public discussion of the reasons for New Zealand's high youth suicide rate, which is still unexplained.
Health Ministry figures published last month show the rate dropped from a peak of 29 suicides for every 100,000 young people in 1995 to 18 per 100,000 in 2009. But this was still the highest in the world for males and third-highest for females.
The youth suicide rate was below all older age groups for 40 years until 1985, then almost doubled in three years and has stayed above all older age groups in most years since 1987.
"Its nature tells us it's probably to do with the high youth unemployment rate, the high dropout rate of certain youth from education, disproportionately represented in the Maori population," Judge MacLean said. "You can look at your own life experience - perhaps society was more supportive of young people, family links were stronger, teenagers didn't have the disposable income, the ability to keep things from their parents via the internet ...
"When I was a kid, my parents knew what I was doing. Increasingly with the technology available today, and the way adolescents live, many parents despair of ever keeping track of what the kids are up to."
Internet advice agency Netsafe told the Law Commission that it was concerned about a "proliferation of anonymous Facebook pages used to publish derogatory and often sexually explicit rumours about students".
The commission reported: "The first of these gossip pages to come to their attention included 'extremely derogatory' comments about students and ultimately is thought to have played some part in the suicide of a young girl."
It suggested creating a new commissioner or a tribunal with powers to order internet providers to take down such pages if they breach any law and are likely to result in psychological or other harm.
