Wednesday, 25 October 2017

Dear Kris...

Welcome to your new role as competition czar and overlord of the Commerce Commission.

It's now up to you to make sure that consumers continue to get a good choice of goods and services at fair prices, and that businesses can compete vigorously for their custom.

You'll find that the Commission, and the competition policy bits of MBIE, are full of talented people with their hearts in the right place. You'll also find that many of them are frustrated by the glacial pace of policy change.

So my first suggestion is: don't be another obstacle in their way. Move things along.

What things? Start with these.

Currently the plan is that the Commission will - sometime - be allowed to look into competition problems, but only if asked to by the government (the jargon is "market studies").

By all means keep the option for you and your colleagues to ask the Commission to look at stuff. You'll find (for example) there's a lot of support for a study of our petrol industry.

But a much better plan would be to let the Commission also look at things off its own bat. That's normal overseas, by the way, and if you want to see a good example of how it works, look at the Australian Competition and Consumer Commission's series of  reports on petrol markets in Oz. Here's their latest media release, 'Lack of competition driving high Brisbane petrol prices'.

Keep a budget lid on it, though. Currently the plan is, the Commission will get $1.5 million a year, max. That's plenty, and will give them the right incentive to be efficient.

Next there's cartels. We were going to jail 'hard core' cartelists, the guys who secretly get together in hotel rooms at trade shows and conspire to fix prices, rig auctions, and carve up the world's markets among themselves.

One of your predecessors said, Nah, let's not feel their collar. He was wrong. The Aussies - and others - who can jail these crooks have the right end of the stick.

And while you're dealing to cartelists, take away the special treatment for the shipping lines. They still get their own cosy bit of the Commerce Act. They shouldn't, especially since they've been revealed to be global cartelists (you'll enjoy this). If they need to coordinate things, have them get an authorisation from the Commission, just like everyone else.

Now a trickier one. It's tricky here, and everywhere, but now you're The Man who's got to make the call.

It's what to do when a big company is using its size to impede or eliminate smaller competitors ("abuse of market power"). We have a law against it - section 36 of the Commerce Act. But the law is broken. It's incapable of pinging anything except in very rare cases. It's like nailing jelly to the wall. Disclosure: I've been one of those jelly-nailers.

But you don't have to take my word for it: you'll be having a early coffee, I dare say, with Mark Berry at the Commission, the current chief jelly-nailer. He'll tell you that s36 is knackered, and he's right.

Answer? The Aussies have turned their minds to this (their "Harper review") and fixed their law. So the answer is, import their wording holus bolus into our own Commerce Act. And strike a blow for trans-Tasman harmonisation while you're at it. The media release writes itself.

While you're having your first meet and greet coffees, have a natter with Murray Sherwin and the guys at the Productivity Commission. Your colleagues with economic portfolios will soon be tearing their hair out over New Zealand's poor productivity performance: as Murray and his mates will tell you, one of the answers is stronger competition to put the heat on business performance.

One last thing.

It's easy to get into an anti-business mindset in the competition and regulation game - all these cartels and abuses of market power and whatnot.

Don't go there. The thing that you've got to stay focussed on is the competitive process itself. That's what delivers the benefits to consumers, and to the businesses who best meet their needs.

And if anyone down the big end of town starts giving you gyp about an anti-business stance, quietly remind them that the primary victim of cartels and other rorts is often other businesses. They want an example? The cardboard box rort in Australia: every company on either side of the Tasman  (including some very large ones) who wanted to put their stuff in a box was being ripped off.

That's enough to be going on with - good luck!

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