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ComCom pushing for market studies powers despite business opposition

Thursday 15th February 2018

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The Commerce Commission says its market studies powers are a "live issue" of discussion with the government, and would expect that New Zealand would mirror Australian law when legislation is introduced.

Late last year, Commerce and Consumer Affairs Minister Kris Faafoi said he has asked officials to fast-track work to enable the ComCom to undertake market studies by the end of 2018, which would mean it could compel companies to provide information so the regulator can fully understand how markets are functioning. That followed a recommendation by the Ministry of Business, Innovation and Employment that the regulator get market studies powers to further investigate fuel prices.

Chair Mark Berry said MBIE was driving the process with issues papers at the moment, and the commission is actively engaged in the process though there has been strong opposition from business. 

Berry said the section of the Commerce Act which covers businesses taking advantage of market power was "not a dead letter", though the regulator has not pursued any cases under that section in the past five years. He said that the agency would not be surprised to see two cases of that kind in a decade as "they're not everyday cases", but also that there had been cases which the regulator had been unable to proceed with under the way the law is currently written.

Berry referenced the 2003 claim by Origin Pacific Airways that Air New Zealand took advantage of its market power in announcing a direct flight between Christchurch and Hamilton shortly after Origin did. He said it was not considered possible under the current act to bring a proceeding in that case.

The Australian Competition and Consumer Commission (ACCC) uses that country's Competition and Consumer Act 2010, which had its market powers section updated last year. Berry said it would make abundant sense for New Zealand to adopt the Australian law and the ComCom has the benefit of being able to rely on the ACCC's approach. 

The chair noted around 60 percent of agencies like the ComCom around the world have market studies powers, and that a market study can identify problems and provide solutions even if prosecutions are not allowable under the legislation. 

The regulator is also in discussions about the level of funding it would get for market studies investigations, Berry said, with potential in that area for costs to "blow out". The ACCC has 10 staff working on market studies, he said.


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