Tuesday, 10 November 2020

More market studies

We've got more market studies lining up: as Labour announced during the election campaign there will be two new ones, into supermarkets and building materials. 

No dramas there, but there are two aspects I'd like to pick up on.

One is that the Commerce Act says that either the Commerce Commission (s50) or the Minister for Commerce (s51), now Dr David Clark, can initiate a market study if either "considers it to be in the public interest to do so". "In the public interest" isn't defined, but the FAQ that went out with the announcement included this:

A study is considered to be in the public interest if it promotes the purpose of the Commerce Act – to promote competition in markets for the long-term benefit of consumers within New Zealand, and the following criteria may be relevant:

  • There are existing indications of competition problems in the market (such as high prices or low levels of innovation).
  • The market is of strategic importance to the New Zealand economy or consumers.
  •  It is likely there will be viable solutions to any issues that are found.
  •  A formal Commerce Commission study would add value above work that could be done by other government agencies.

That's not a bad checklist. I wouldn't have run with the "strategic" point myself but the others look good. It mightn't be a bad idea to lock the criteria in, in some codified form.

The timing of the announcement though was not ideal. Last December, when I said "I'd heard rumours" about the next market studies, it was pretty much an open secret around the competition policy traps that supermarkets and building materials were next cabs off the rank. Either of them could have been got underway then, once the Commission's resources had been freed up after the petrol market study was finished, rather than nine months later in the middle of an election campaign. 

I don't mind candidates for office telling us what they plan to do: heaven knows, we've seen enough in New Zealand of politicians springing things on us. But we are in the early stages of bedding in our new regime and it would be better if the initiation of market studies were kept away from electioneering. We don't need the risk that business, and perhaps wider public, support for our shiny new market studies gets chipped away if the process appears politicised. 

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