Competition watchdog could get power to conduct probes without Government approval

Monday, 4 December 2017

New Commerce Minister Kris Faafoi sys the Commerce Commission should have the independence to conduct market probes without needing political approval.

New Zealand's competition watchdog could be freed to conduct probes into industries where the regulator suspects market abuse without needing political approval.

Days after the Government in Australia caved to public pressure for an inquiry into the banking sector, Commerce Minister Kris Faafoi said he wanted to 'take the politics out' of decision making on inquiries.

An investigation into petrol prices earlier this year found the market may not be operating competitively, but was hampered by a refusal from Mobil and Gull to provide the requested information.

In June, the former National Government proposed giving the Commerce Commission new powers to conduct market studies without having to have evidence of collusion, as efforts to investigate the petrol market were frustrated by a lack of co-operation by Mobil and Gull.

But National's response to give the commission the power to compel companies to comply with its requests retained considerable political power within the Government: studies would only be taken upon direction from the Commerce Minister.

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Commerce Minister Kris Faafoi indicated the Labour-led Government intended to cede decision-making power on what studies to undertake to the regulator.

'We're quite keen to give the Commerce Commission the power to self initiate … If the Commerce Commission believes there's a public interest in looking into a specific market, then we should take the politics out and let them do it,' Faafoi said.

'I think they should have the independence to be able to say that if a market needs looking into that they should do it.'

Competition lawyers welcomed the move.

Michael Wigley, principal at Wigley & Co, said requiring ministerial approval, even if it was only signing off on the decision, added a political element to something which should be done by an independent regulator.

'The commission is well placed to make a decision as to whether a particular area needs a market review and they can make an independent assessment. They're in this area day in, day out, so they see what's going on,' Wigley said.

'Sure, they're going to get lobbied and they'll have submissions made to them and so on, but it will still be a better and independent process.'

Matt Sumpter, a partner at Chapman Tripp, said having ministers make the decisions could have meant market studies were done for political, rather than economic reasons.

'You [could] get into Australian-style politics where you get populist cries for the government to 'do something' about a particular industry,' Sumpter said.

While the move was 'desirable', Sumpter said it was essential that the Commerce Commission was given funding to conduct the studies 'as opposed to going cap in hand' to the minister for funding each time it wanted to undertake one, which he estimated would cost around $1 million each.

'That would just be circular, a political decision whether to grant them money. It's one thing to say 'you can be self-starters here' but unless they're given sufficient budget, it's meaningless. They'll need a top-up.'

Faafoi also indicated the new Government wanted to expedite the process to give the commission the powers to undertake the studies, after being informed passing the required legislation could take 18 months.

'We'd be quite keen to do that before Christmas next year. We hope to speed that up to get [the commission] that [market study] tool as soon as we can,' Faafoi said.

The would give the commission the powers from the start of 2019, Faafoi said. He declined to name any markets which he believed could be worthy of a probe.

Z Energy chief executive Mike Bennetts has said the company would welcome a study by the Commerce Commission, saying it would do a better job than the one ordered by Collins and commissioned by officials at the Ministry of Business, Innovation and Employment.

In November, Energy Minister Megan Woods said a probe into fuel margins by the Commerce Commission was a 'live option'.