Wednesday, 11 June 2014

That was quick...

Thanks to various Twitter posts - from Covec's Aaron Schiff (@aschiff) and the Productivity Commission itself (@NZprocom) - I've learned that the government is going to take up the Commission's recommendations to review some of the knottier and arguably ineffective bits of the Commerce Act, notably s36.

I missed the news myself, if indeed there was a news release, but I find that the decision is in the latest update from MBIE on The Business Growth Agenda Future Direction 2014, where the relevant bit (on p55) is this:
"We will also review the misuse of market power prohibition and related matters in response to the Productivity Commission’s recent inquiries. Because we are committed to better regulation and value for money, this review will also explore options for the removal or overhaul of regulatory provisions that may no longer be necessary or working effectively, including those for resale price maintenance and the cease and desist regime".
MBIE now has a new Progress Indicator in Priority Area 11 (a target, in other words) to "Improve the competition regime to protect consumers" (p56). Like all the other progress indicators in the document, it doesn't have a target date against it, though it (and they) should. And the traffic light system of reporting on progress indicators has a pretty useless classification (new/in progress/implementing/completed), whereas just about every traffic light system I've seen in the corporate world has a more hold-their-feet-to-the-fire version designed to highlight when projects are behind time or behind budget.

I mention monitoring progress for two reasons. One is that I have had the impression that MBIE weren't that keen on grappling with s36 before the Productivity Commission prodded the government to make MBIE readdress the issue, and I wouldn't like to think that MBIE will take its own stately time to deliver. And I'm also slightly concerned that throwing other competition law provisions into the mix might blow timeframes out. So now that the government has been commendably quick in taking up the issue, I'd like to see some concrete requirement on MBIE to be commendably quick in delivering a good response.

Not that I've got any issue with adding in some other competition or regulatory provisions for scrutiny, and the two itemised look well worth revisiting. Resale price maintenance (principally s37 and s38 of the Commerce Act), as I've blogged before, isn't, on modern legal or economic thinking, the black and white evil you might have thought it was. And the cease and desist provisions of the Act (sections 74A through D) have essentially withered on the vine. You'd think off the top of your head that they could play a useful role, especially in more dynamic situations where, by the time the carthorse of the courts has lumbered into action, it's too late to remedy the competitive damage. However, as far as I can tell, the cease and desist cannon has been fired in anger only once (back in 2006), so you can see why the government might want to know whether it's still  necessary or working effectively.

All up, this is very prompt and very satisfying progress from the government in directing a relook at some of the more problematic areas of competition and regulatory policy. Let's hope the results of the exercise will be with us in reasonably short order.

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