Outgoing Commerce Commission Chairman, Mark Berry, suggests the competition watchdog should do a market study on the construction sector once its study on the retail fuel market is complete.
Speaking to interest.co.nz before his term expires on May 31, Berry said the construction sector was “clearly a market of national importance”.
“The affordability of housing is naturally a major issue for the wellbeing of New Zealanders. I think if there’s some exploration as to what’s behind the cost of housing and the extent to which construction is a problem in that industry, that certainly would have merit.”
Berry flagged the cost of construction materials as an area of concern, but wouldn’t elaborate on the parts of the supply chain he believed required particular scrutiny.
He suggested work the Productivity Commission’s done in this area could form the basis of a study’s terms of reference.
The Government in October responded to a public outcry over high petrol prices that varied significantly across the country by fast-tracking the passing of the Commerce Amendment Bill 2018 to empower the Commission to undertake market studies.
The retail fuel market study it started in December last year is due to be completed by December 5 this year.
While Berry believed there would be a “dialogue” between the Commission, the Ministry of Business Innovation and Employment and Commerce and Consumer Affairs Minister Kris Faafoi before picking the next sector to be studied, he said: “My prediction is that it will be the Minister who directs the next market study, and likely to be the path in the future.”
Legally market studies can be initiated by the Minister or the Commission.
Law change needed to crackdown on supermarkets
Asked about whether he was concerned decisions would be driven by politics rather than problems identified by the experts in the Commission, Berry said he didn’t see any major rifts or tensions.
“I’d expect some collaboration in the exercise.”
While the Green Party had pushed for a study into the Woolworths/Foodstuffs supermarket duopoly to be undertaken, Berry wasn’t entirely sold on the idea.
He noted the narrowness of the law had in the past restricted the Commission from taking action against supermarkets.
“Our ability to intervene in it is only if we find there to be unlawful conduct through collusion or through the exercise of monopoly power, and we haven’t seen that in my time at the Commission.”
Nonetheless, Berry acknowledged broadening the law could be looked at as a part of a supermarket sector study.
Patience and persistence
Overall Berry was pleased the Commission had been empowered to do market studies.
“We often do analysis and can’t take cases, because we simply are applying strict legal frameworks. We see market failure and market problems, so if we can actually do studies and reach a conclusion as to whether competition is working properly in a market or not, and then endeavour to make recommendations as to how markets could move to be more competitive, I think that’s quite a positive role that we can fulfil.”
Berry cautioned against passing judgement on studies’ success too soon, saying six to 10 would need to be done before their value could be fairly assessed.
Pressed on whether the studies could be done more quickly than the year allocated to the fuel one for example, Berry said no.
Five full time Commission staff, assisted by others, are working on the fuel study.
Berry said the work was complex and market studies in the likes of Australia were typically done in 18 months.
Challenge going forward: Regulating companies based overseas
Looking ahead, Berry believed international giants, like Google and Facebook, would pose the biggest challenges to the Commission.
“Suddenly everyone’s woken up to market power and control that those kinds of major entities have,” he said.
“It is going to be very difficult to litigate companies that have no domestic presence here, who engage in quite openly misleading and deceptive conduct.”
He said his counterparts around the world were likewise grappling with how to regulate these companies, and particularly their use of data.
He believed an international forum like the OECD could take the lead enforcing international laws created, but conceded it was a difficult area to navigate.
On a high level, Berry was supportive of open data enhancing competition, but stressed the importance of protecting privacy.
Banks have been among the first companies to be pushed by governments around the world, including in New Zealand, to share their data with third parties to enhance competition.
Having been the Commerce Commission Chairman for 10 years, Berry will return to practicing law as barrister in Auckland. He will be succeeded by a Commissioner at the agency, Anna Rawlings.