Andrew Bayly gives Commerce Commission further prod to be 'courageous'

Thursday, 20 June 2024

Commerce Minister Andrew Bayly expects “a few words” if the commission only spends half its litigation funding allocation next year.

Commerce Minister Andrew Bayly has called on the Commerce Commission to be a “courageous litigator” telling MPs he found it troubling that the watchdog was returning funding it was allocated to mount prosecutions unspent.

He also announced that the Government intended to conduct a review of Part 4 of the Commerce Act, which allows the commission to regulate prices in sectors of the economy where there is little or no competition.

Bayly made clear in March that he wanted the commission to be more ambitious and take more risks in its legal actions, in order to better protect competition.

Appearing in front of Parliament’s Economic Development, Science and Innovation select committee on Thursday, Bayly stepped up that message up a notch.

The Government allocates $12.6 million each year to a Major Litigation Fund that the commission can draw down to fund its internal legal costs and to pay for the likes of barristers, law firm fees and expert witnesses.

At the end of the year it must return any underspend in the annual funding to the Crown.

“Historically, it has not spent the money which I find slightly troubling,” Bayly told the committee.

Commerce Commission chairperson John Small told The Post in March that it was having to manage its litigation fund “very carefully”.

But the commission subsequently revealed in response to an Official Information Act request that it had only spent $7.9m of its Major Litigation Fund so far this year, with only one month in its financial year remaining.

Bayly told the select committee he had told the commission he would like it to be a courageous litigator.

“What I mean by that is I don't necessarily want the Commerce Commission to pursue easy cases; I want it to be challenging. If they want to test something, they may lose the case; that does not worry me.

Existing competition policies haven’t stopped markets from becoming more “concentrated“ over a period of generations, according to Bayly’s analysis.

“I want them to physically spend all the money and be courageous about doing it. If they come back in a year’s time and they’ve spent $6m out of the $12.6m, I think there will be a few words.”

The commission acknowledged that “a significant proportion” of the proceedings it brought were not defended; meaning that the parties it was pursuing admitted guilt before they went to trial.

The watchdog is currently pursuing criminal charges against Kiwibank after the bank dobbed itself in to the commission for erroneously charging customers $7m in fees.

On Wednesday, it filed proceedings against Foodstuffs North Island over anti-competitive land covenants at the same that the supermarket group agreed a settlement with the commission.

Quizzed by Opposition MPs on the Government’s plans to encourage more competition in the groceries industry and other sectors, Bayly suggested consumers were a victim of decades of eroded competition.

“We want to see more competition, Unfortunately, New Zealand is where it is. We are a product of what we did 20 years ago.

“Over successive generations, we've allowed and permitted changes in industry sectors that have led to agglomeration and now market concentration,” he said.

Bayly suggested the Review of Part 4 of the Commerce Act could be one way to help address some issues.

The provisions are currently used by the Commerce Commission to control fees charged by monopoly utilities, including electricity lines companies, airports — in respect of their landing fees — and gas distribution charges.

The review of that part of the act would be designed to ensure it was fit for purpose “and that we were achieving the outcomes New Zealand want”, he said.