Commerce and Consumer Affairs Minister Andrew Bayly is planning a “two-pronged approach” to tackle competition with the launch of a government review into New Zealand’s competition laws.
The Government will be reviewing the governance and effectiveness of the Commerce Commission and updating the competition settings in the Commerce Act.
Bayly requested the Ministry of Business, Innovation and Employment (MBIE) commission the review. The competition rules review will be led by former Commerce Commission Chairwoman and economist Paula Rebstock, alongside ex-chairman of the Australian Competition & Consumer Commission Allan Fels, and director and economist David Hunt, and will be completed by May 2025.
Bayly said OECD research had found New Zealand lags “well behind” international peers when it comes to competition.
“Unfortunately, most New Zealanders do not need an expert to tell them this,” he said.
“Kiwis face limited choice and high prices in a number of key sectors from groceries to banking and building supplies. I’m sure many Kiwis remember with frustration the plasterboard crisis in 2022, which was an extreme example of competition failure.”
The review of the Commerce Act will focus on merger settings, with Bayly noting NZ’s merger regime hasn’t had a review in over 20 years and the economic landscape has “changed significantly” in that time.
Bayly added that while mergers can improve market efficiencies, they can also “entrench market power and create monopolies.”
The review of the Commerce Commission will consider the Commission’s “organisational capability.” This will mean ensuring the consumer watchdog has the ability to make good decisions and prioritise its resources for the benefit of the NZ economy at large, Bayly said.
“In order to have robust, genuinely competitive markets, we need to have fit-for-purpose laws and a regulator that has the tools and commercial nous to oversee the law. The two go hand-in-hand,” he said.
“Improving competition to drive down the cost of living and increase productivity is one of the Government’s top priorities.”
Bayly has called for more “red tape” to be cut in NZ's duopoly dominated grocery sector and has banking competition on his to-do list as well.
Out of step
Bayly told interest.co.nz that the review of ComCom is “quite constrained” due to the Commerce Commission being subject to a lot of reviews.
“I want to be clear, I'm not being critical of the Commerce Commission at the moment, but what I want to do is make sure that if you think about it over the next 10 to 20 years, do we have enough commercial skill sets inside Commerce Commission to prioritise its workflow and be aware of what's happening in market development,” he said.
Bayly said that NZ was “increasingly out of step with international trends” and he wanted to get the country into a position where it can be more proactive when it comes to competition.
This involves stamping out any chance of “nascent” competition. Bayly, using banks as an example, described this as “picking off new competitors who potentially could be quite significant disruptors to the entire banking sector”.
“That would be a worry,” he said.
“What I'm trying to do with these reforms though, is put in place a mechanism to stop us getting to the situation where we now find ourselves in: where we do have a small number of players with significant market share.”
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