GOLDSMITH RISKS A BIG BUSINESS BACKLASH OVER COMMERCE COMMISSION REVIEW
By Richard Harman (author)
Though Commerce and Consumer Affairs Minister Paul Goldsmith is playing it down, a Government review of competition law that he announced yesterday has the potential to make radical changes that could affect some of New Zealand’s largest companies.
Mr Goldsmith describes the review as a “health check” on the current law.
But accompanying documentation from the Ministry of Business, Innovation and Employment says the current law, administered by the Commerce Commission.
The Ministry argues that it has not been working satisfactorily because it is:
- failing to punish anti-competitive conduct by powerful firms and
- too complex to allow for cost-effective and timely application,
Commenting on the announcement, the law firm Chapman Tripp, says the prospect of amendments to the Commerce Act will have implications for the commercial and compliance strategies of New Zealand’s most strategically important companies.
In recent years the Commission’s decisions have been dominated by companies in the electricity and gas industries but big name firms like Fonterra, SkyCity and Vodafone have also found themselves the subject of Commerce Commission attention.
Mr Goldsmith told POLITIK the review had been first proposed two ears ago but had been delayed but the Australians looking at their competition laws – which New Zealand’s are aligned with under the CER.
He said it was a question of asking whether our law was still appropriate and “have we got it right”.
And so the Government is now seeking feedback on the issues paper which will be placed on the MBIE website.
But does the review indicate that the legislation and process up till now has been ineffective?
“That’s the question we are testing,” he said.
“Has it or hasn’t it been?
“The hunch that has been put forward in the issues appear is that on the face of it there haven’t been all that many successful cases.
“So that’s the question we are asking.
“Is it too difficult??
“Is it too complicated and hard to predict and if so, what would be a better alternative?”
Mr Goldsmith said the Government would look at feedback to the paper over the next few months and then make a decision whether to legislate to change the Commerce Act.
“the hurdle that will have to be crossed is whether there is a strong case that the current regime is not providing an effective deterrent against misuse of market power and that’s still an open question and so we need to some strong evidence of that and then secondly is there a better alternative.”
Mr Goldsmith the debate would have to consider whether the evidential burden of proof was set too high or whether New Zealand went to an effects based regime such as is employed in the European Union.
“That would be a very substantial change and we wouldn’t be contemplating that without some serious thought beforehand.”
The review will also ask whether the Commerce Commission should have the power to do market studies – something it has been asking for some time now.
But Mr Goldsmith indicated that that power could be given to another agency.
“The Productivity Commission recently did that (investigate a market) in the housing space and drilled deep into a particular area.
“We could give formal powers to the Commerce Commission to do that.
“There are pros and cons in that.”
Mr Godlsmith’s softly-softly approach to this issue indicates how politically sensitive it will be to potentially take on some of the country’s biggest companies, most of who have easy access to Government Ministers, particularly the Prime Minister.
In the run up to the 2017 election, the last thing the Government will want is a battle with big business.