Where are we?

Perforce, a wide variety of public and private sector organisations have stepped into the breach and done a good job of filling in the long-standing gaps in our ability to track the economy in close to real time. I've probably said enough about the need for Stats NZ, in particular, to keep up the effort when we get back to normal, so instead let's have a look at what the indicators are actually telling us.

On the upside, Sense Partner's update today showed that electricity generation is on the rise. There has to be a pretty good link between generation and overall economic activity: the data (originally from the Electricity Authority's useful database) suggest that the economy was running some 20% below normal levels: since dropping back to Level 3, we look to be operating some 10% below where we were. Better, but still a large shock to production and incomes.

The TradeMe jobs listing and job ad views also suggest some decent improvement from the very worst, though both are still well down on normal. Other indicators - particularly those for transport volumes - are however still at dire levels. Sense has started reporting usage of the Apple Maps app, which indicates mobility (Apple has the data on a variety of countries here): there was a bit of a blip immediately around the time we announced Level 3, but it's dropped back since to a small fraction of previous levels. An arm of Stats, Data Ventures, also has a good range of mobility data here. They show a similar collapse, concentrated on retail, employment and tourism mobility.

Treasury's latest dashboard has especially useful data on retail sales. It's dreadful: eyeballing it, it looks like consumer spending is roughly half of its pre-covid levels, even after some improvement from the depths of Level 4.

The data suggests that the setback to New Zealand retail sales is a good deal more severe than the one in Australia. This is from the AlphaBeta / illion dashboard I mentioned the other day. But that should be no great surprise, as our lockdown has been stricter than theirs.

Incidentally, there's been a bit of sniping here in New Zealand about firms that supposedly shouldn't have applied for the Jobseeker Support scheme. By way of perspective, the Aussie Bureau of Statistics, as part of its covid-19 coverage, has discovered that overall some 61% of Aussie businesses have registered or intend to register for their equivalent JobKeeper Payment scheme. Here's their graphic (from this report) of what percentage of each industry has registered, with the boxes proportionate to industry shares of total employment. The industry pattern is exactly what you'd expect. Domestic critics should pull their heads in: everything we see (and bear in mind we have it worse than them) is overwhelmingly showing real difficulty for businesses in both countries, not bludging.

The severity of our setback raises the question about whether we're doing enough to push back with expansionary policy. Here's a chart from the Treasury dashboard that looks at some comparators.

It's early days, but I suspect that our fiscal response is going to have to be a good deal larger again than it has been to date. The Jobseeker Support scheme was an excellent start - especially the quick non-bureaucratic process - but I strongly doubt that 7% of GDP in fiscal support is going to be the final bill for effective economic pushback.

Even more real-time data

An economist colleague - oh all right, Kieran Murray of Sapere - sent me through some fascinating near-real-time economic data in Australia. It's from a partnership between illion, previously the Australian operations of Dun & Bradstreet, and Aussie economic consultants AlphaBeta.

Their very up to date data covers, among other things, consumer spending by region and by category, as well as indicators of personal or business financial distress. Here for example is the overall consumer spending graph. The distinction between the 'crisis' and 'stimulus' periods mainly reflects the impact of the A$750 cheques that went out from the end of March to over six million lower-income Australian households.

The sectoral breakdown of spend shows exactly how we've managed through lockdown: the biggest increases were on food delivery, online gambling, furniture and office (it's become evident from Zoom meetings that many folks, to start with, didn't have anything like a half-way equipped home office), home improvement (ditto), and alcohol and tobacco. While the bets and the booze don't reflect very well on how we've spent our enforced time at home, there's a small solace that the next largest increase was on pet care. Subscription TV was up too, though not as much as I'd have expected (11% more than in a 'normal' week).

This is excellent stuff. Yet again we've shown, if we put our minds to it, that we can actually get a much better handle on the real-time state of the economy than we've had before: if the Australian Treasury or others with skin in the game didn't know the likely scale and shape of the covid hit to retail sales, they do now.

Next thing is to keep this going on the other side of covid. As I've been banging on for a while (eg here and here), over the years we've had inadequate indicators of the cyclical state of the New Zealand economy: they've been too few and they've been too late. As we're now discovering in both New Zealand and Australia, there are treasure troves of near real-time data all over the place that can be used to fill in the gaps. Hopefully operators like illion and AlphaBeta will keep these data flows going but if not, and in any event, Stats NZ and their counterparts ought to be getting alongside these data providers and developing a suite of timely high-frequency indicators. Covid's been no time to be blundering in a statistical fog, but neither is anytime else.

Getting even more real

No sooner had I posted about some promising 'dashboards' from Sense Partners and the Treasury, which aim to use a variety of data to try and gauge exactly where economic activity has got to through lockdown, than Stats also came to the party with its own data portal (media release here, portal itself here).

It's excellent. They've even found a data sources I'd never heard of, and I've played around with quite a few. It's from the GDELT Project, showing weekly economic sentiment (it's in the 'Economic'/'Confidence' section). I'm not sure whether it's New Zealand specific or global, but either way it's informative.

Here's Z's weekly fuel sales (in 'Economic'/'Activity'): hat-tip to them for sharing.

Gift horses and mouths and so on, but if the portal could organise some weekly (or even daily) electronic card expenditure data, that would be a useful extension to what is already a good (and easy to use) data set.

Stats says all the right things about the data being other peoples', not theirs, and go look up the methodology of the original creators if you want to find out more about what they mean and how they've been created.

All good stuff - and let's hope that on the other side of covid, Stats give some thought (and Treasury gives some money) to a permanent improvement in our ability to keep our finger on the day to day pulse of the economy.

Getting real

We don't have an adequate grasp on the real-time state of the economy. We need much more close-to-real-time data.

That's it. The rest of this post is a riff on the same theme.

As covid wreaks its damage, it would be good to know, now, what that damage is: what's the initial hit to GDP? Where are the worst impacts? How are the knock-on ripple effects going? Among many other things, it would inform how hard fiscal policy needs to fight back. As it is, we - and many other countries - are at the "Oops, did I say $10 billion? I meant $40 billion" stage of Finance Ministers' groping for what the fiscal response needs to be.

Crises apart, we should always have had better high frequency cyclical data than we've actually had. As Michael Reddell said recently in the 'Measuring the slump' post on his Croaking Cassandra blog, "We and Australia are the only two OECD countries without a monthly CPI, our GDP estimates (quarterly only, as with most countries) come out only with a very long lag, we don’t have a monthly industrial production series, and we still don’t have an income-based measure of GDP". These deficiencies have been known for a long time - I can remember discussions over the years at Stats' Advisory Committee on Economic Statistics (since disbanded) - but the debate never got as far as prising open Treasury's chequebook.

Michael had several constructive ideas on how to improve things, including having Stats publish the monthly results from its rolling quarterly Household Labour Force survey, and having Stats also "look at hosting some sort of dashboard pulling together, and making openly available, all manner of formal and informal economic indicators. There have to be lots".

The good news is that at least two parties (though not Stats, yet) have had a go at dashboards.

First out of the blocks was Sense Partners: you can access their latest six-variable dashboard here. It's good, isn't it? I especially liked the electricity generation graph (below). You'd think that it must be reasonably close to the fall in GDP, and is suggesting something like a drop of close to 20% in output since late March (though there may be seasonal stuff going on, too).

They were closely followed by Treasury, who've just put out theirs (media release here, access to the pdf dashboard here). Personally I felt the Sense set gave me more of a real-time feel, though Treasury's information was interesting in its own right, especially the traffic data and the data on uptake of the job subsidy scheme (below).

The next thing that would be really useful would be some composite indicator of all these glimpses of the overall underlying reality. As it happens economists have a nifty way of devising one: it's called 'principal components', and works by assembling a lot of data, hopefully all related (positively or negatively) to some underlying common influence, and then analysing it econometrically to see if you can identify a common background factor.

Treasury's dashboard helpfully included some international data, and one of the series shown was, indeed, one of those composite indicators, for the US. It looks like this.

If you want to follow the series yourself it's here at the Fed of New York site, and there is a (short) write-up of how it all works here. The devisers of the index have calibrated it so that percentage changes in the index can be (give or take) read as percentage changes in GDP, or as they put it, "a reading of 2 percent in a given week means that if the week’s conditions persisted for an entire quarter, we would expect, on average, 2 percent [GDP] growth relative to a year previous". So we know that if early-April conditions persisted for the whole of the June quarter, US GDP would be some 9% lower.

Can we be sure that the weekly economic index does in fact track US GDP pretty well? Yes, we can, as you can see below (this is from Chapter 1, 'US economic activity during the early weeks of the SARS-Cov-2 outbreak', in Issue 6 of the Centre for Economic Policy Research's covid economics series, well worth following).

Two things to finish with.

One, obvs, wouldn't it be nice if someone did the same number crunching on New Zealand data and gave us close to a real-time reading on where GDP has got to? And yes, I'm happy to be part of the effort if anyone feels the urge to get it done.

Two, the wider point about the limited range of our current official cyclical data, and the speed with which what we have gets published, needs to be addressed. You can't go to a competition or regulation conference these days without people blathering on about how 'big data' enables market power, or threatens privacy, but you don't see anything like the same focus on how the torrents of big data could be used to generate near-real-time cyclical gauges.

It's fine to have the business as usual, industrial strength, quality-assured things like the quarterly national accounts. But as Grant Robertson and the lads at Treasury - and the rest of us - are finding out, there's a big role for the cheap and cheerful but timely and informative indicators, too. We've shelled out some $9 billion on wage support: in the greater scheme of things a couple of mill to zero in on where we actually are would be money very, very well spent.

Go your own way, or else

Last week the Supreme Court published its Lodge judgement (media release here). By way of background the Commerce Commission had taken a range of Hamilton real estate agents to court for an alleged price-fix breach of s30 of the Commerce Act, alleging that they had collusively agreed to charge their customers TradeMe listing fees rather than absorbing them. The agencies were responding to a proposed thumping great rise in TradeMe's charges for online real estate listings. Before the increase, agencies would often absorb the charge, post increase they reckoned they wouldn't be able to afford to.

Many of the agencies settled and paid (even by my cartel-hostile standards) swingeing penalties. Lodge (the company and its principals) fought on. They won in the High Court ('...and then the wheels came off'). The Commerce Commission took it to the Court of Appeal and prevailed ('The wheels are back on'). Lodge took it to the Supreme Court, and as we now know, have lost.

In the process we've ended up in a better place. We've now got greater clarity on exactly what's involved in that 'meeting of minds' that turns what might have been simultaneous and identical but unilateral reactions into illegal collusion. We've also got a better steer on whether collective agreement on part of a product or service offering - even if only a smallish part of the overall price - constitutes 'controlling' the price (it generally does).

On the first point, the key bit at [54] (footnote omitted and Giltrap reference added) is

Tipping J [in the classic Giltrap cartel case] was making it clear that there will be no arrangement unless the expectation that arises from the consensus is such that it can be inferred that the parties to the consensus have assumed a moral obligation to each other. We would substitute “made a commitment” in place of “assumed a moral obligation”. Calling such an obligation a “moral obligation” introduces morality into a context where it adds nothing. It seems to us that the essential thing is that a commitment is made: one that is not legally binding but is sufficient to be the basis of an expectation on the part of the other parties that those who made the commitment will act or refrain from acting in the manner the consensus envisages.

Or as the Court wrapped it up at [58]

We summarise the test in this way. If there is a consensus or meeting of minds among competitors involving a commitment from one or more of them to act (or refrain from acting) in a certain way, that will constitute an arrangement (or understanding). The commitment does not need to be legally binding but must be such that it gives rise to an expectation on the part of the other parties that those who made the commitment will act or refrain from acting in the manner the consensus envisages.

On the second issue of 'controlling' price, you might argue that collectively agreeing on an approach to the TradeMe fee made no real difference, given that the TradeMe fee was only a small part of the overall cost of the service, which was of course dominated by the percentage-of-your-house-value estate agent's fee. But the Supreme Court harked back to the Caltex case where the petrol companies had collectively agreed to to remove a previously free carwash: at [143]

In that case, three petrol retailers entered into an arrangement to abandon a practice of offering a free carwash to any person making a purchase of $20 or more of petrol. A carwash was worth about $2 at the time. The arrangement did not involve any agreement as to the prices that would be charged for petrol or carwashes. Salmon J found that the arrangement had the effect of controlling the price of petrol sold by the parties to the arrangement because it restrained the free action of the parties in setting the price

and the Court said at [145]:

These [Caltex] authorities as to what amounts to “controlling” prices are longstanding and we see no reason to depart from them.

It is possible that some components of an overall deal might indeed be so small as to be competitively insignificant: at [155]

We accept that there will be cases where the component of the overall price that is affected by the arrangement is so insignificant that it cannot have the effect of controlling the overall price, assuming that the overall price is otherwise determined by market forces.

The way to think about it, the Court said at [156] is:

the correct position is that price includes a component of the price unless that component is insignificant in competition terms. We do not see this as a mathematical calculation, however

and that must surely be right. You may well be up for a $20K overall house-selling cost either way, but you might well go with the agency that swallows the relatively insignificant TradeMe fee rather than the one that doesn't.

That was exactly the case in the Hamilton house market. At [157]

The evidence established that Trade Me listings were a significant factor in competition between the Hamilton agencies, as both the High Court and Court of Appeal found 

 and at [160]

The effect of the arrangement in relation to the Trade Me listing fee controlled the overall price of the services provided by the agencies by interfering with the competitive process that would otherwise have applied.

So we've got to a clear statement of how the law applies to quite a common situation businesses may encounter. The Court said that there were similarities, for example, with the air cargo cases, where airlines were faced with various new security surcharges (post 9/11) and collectively (but in the end illegally) agreed to pass them on in full to their air cargo customers rather than making independent competitive decisions on whether to absorb them in full or in part.

It is easy to think of other circumstances: where an industry is whacked with some new industry-wide levy, for example, the temptation may be there to have a natter in the industry forum and agree to pass it on. Resist the temptation: you'll be breaching s30. As I put it after the original High Court case, "How much of a cost to absorb, and how much to pass on, needs to be your own independent decision".

There's only one bit of the judgement I'd quibble with, and in the greater scheme of things it doesn't matter, but I wonder about the reasoning in [159] where the Court felt that the Lodge parties seemed to want to have it every which way:

They say on the one hand that the new Trade Me listing fee was so high that it was a natural reaction for agencies to refuse to absorb it, given the considerable cost to them if they did so, but on the other that the fee was such a small component of the overall price of their services that it should be treated as insufficiently significant in competition terms to bring the agreement to fix or control it within the prohibition in s 30.

I don't see an intrinsic contradiction at all. In a very low-margin industry, for example, it is entirely possible to conceive of a cost that is very significant to the suppliers' profitability but is still only an insignificantly small part of the end-customer price. But that's neither here nor there: the big picture is the law is now clearer, and the necessity to do your own thing now even more obvious.

Lessons for later

There will be lots of economic policy lessons from covid-19. One of them, I hope, will be about the coordination of fiscal and monetary policy.

Before the virus, there were many people saying that monetary policy had already been loosened so much that it left central banks too little room for further support if the proverbial encountered the wind redistribution device. And they were right.

Have a look at this simple and I'd say uncontroversial macroeconomic policy schema. There are four states of the world, too high/low inflation crossed with too high/low unemployment. Some folks might prefer an 'output gap' to 'unemployment' but same diff.

What's 'too high' or 'too low' inflation? Judgement call, but there's enough of a consensus these days around 'materially above/below 2%' as a good enough rule of thumb. And 'too high' or 'too low' unemployment? Unemployment is unwelcome at any substantial level, but for these purposes let's call it 'materially above/below the level that would get inflation accelerating' (the 'NAIRU' in the trade). Nobody has a very tight grasp on that level, but (according to Figure 5.3 down the back of the RBNZ's most recent Monetary Policy Statement in February), it's somewhere in the 4% to 4.75% area. So let's say 'clearly above 4.75%/clearly below 4.0%'.

In principle, in two states of the world (the green boxes) fiscal and monetary policy ought to have been pulling together. In the top right quadrant, anything the RBNZ did to boost inflation would likely do the real economy some good, and ditto for fiscal policy helping to increase inflationary pressures.

Did any of that happen? No. In practice the official cash rate got all the way down to 1.0% before fiscal policy belatedly came to the party by way of the $12 billion infrastructure spending plan in the December 11 Half-Year Economic and Fiscal Update. Here's the stance of fiscal policy, from that HYEFU.

During the whole of the 2012 through to 2017 period fiscal policy was actually contractionary - not expansionary, as it should have been, since unemployment was too high through all that period as this chart from the RBNZ shows (again from February's Statement).

I've painted things rather black and white, and there are some nuances being left out. One is that I can see some of what contractionary policy was trying to achieve which, in part, was to restock the ammo after the splurge on anti-GFC and post-earthquake support. And another is that whether the OCR was 5% or 3% or 1% at the onset of the covid-19 out breakout has become somewhat moot, since monetary policy would have seen the OCR cut to its present 0.25% and unconventional monetary tactics deployed either way. And I'm conscious that we're far from the worst in the world at this: the eurozone, for example, pushed monetary policy even further than we did (into negative interest rate territory and into tactics like quantitative easing) and were even more feeble on the fiscal front.

All that said, there has to be a better way. Pushing one setting of policy to Full Steam Ahead and leaving the other on Mild Astern makes no sense in periods when they should be coordinated (like most of the past decade). When we get out of this, we need No 1 The Terrace and No 2 The Terrace to get their act together.

Patrolling a fine line

There is a growing disquiet - particularly in the US, but also elsewhere - that competition policy has got too soft on mergers, and has been permitting anti-competitive increases in market concentration. By coincidence the latest in ComCom's excellent series of telco market monitoring reports included some data on the international costs of mobile plans and broadband. It showed just how acute the problem has become in the US, which is well entrenched on the expensive right hand side of both graphs.

As Thomas Philippon said (pp5-6) in his recent book The Great Reversal: How America Gave Up on Free Markets, "In most advanced economies, consumers pay around [US]$35 for broadband internet connections. In the US, they pay almost double. How on earth did that happen? How did the US, where the internet was "invented" and where access was cheap in the 1990s, become such a laggard, overcharging households for a rather basic service?"

His answer, which feels right, is that incumbents' market power to charge more and/or give less has increased as some markets have become overconcentrated. "First, the entry rate of new businesses has declined. Businesses are now older and face fewer new competitors reach year. This has led to concentration from the bottom up", and he says that "lobbying and [new-entrant-unfriendly] regulations explain much of the decline in entry rates". "Second, agencies and judges have allowed more frequent mergers among large businesses. This has led to concentration from the top down. Together, they account for the rise in concentration that we have observed" (all from p96).

However true that may be, there is a risk that the backlash goes too far the other way and puts in jeopardy mergers that would make pro-competitive sense, despite the first-blush look of yet another increasingly concentrated market. While the latest big mergers won't make any of the "you've gone soft" critics happy, they look to have been the right call.

In the US, the example is the merger of the number three and number four mobile telcos, T-Mobile and Sprint. You might think, looking at the left hand panel in the graph above, that allowing further concentration in the already expensive US mobile market would be a difficult proposition to justify. And yet: the argument for it is that a bulked up three-plus-four will be a more effective competitor to the two big incumbents (AT&T and Verizon) than three and four separately would have been. There's a logic to that: it was raised, for example, in one of the first merger clearances I was involved in (Telstra/Clear in 2001) though in the end the merger was cleared along traditional ongoing competitive constraint from incumbents/new entrants lines. In the US, both the Federal Communication Commission and the Department of Justice were prepared to go along. Individual states weren't best pleased, but the last of the them standing, California, has also folded its hand after negotiating some state-specific goodies.

In Australia, it's similar. The ACCC had opposed the TPG-Vodafone merger: the ACCC reckoned that left to its own devices, TPG would have rolled out a fourth mobile network to compete with the big three (Telstra, Optus and Vodafone itself). The case in the end turned out to be less a contest of economic merger perspectives and more one of disputed facts. The court disagreed with the ACCC's view of the world: at [34] the judge said that "The Court has been left in no relevant uncertainty, after reviewing the evidence, as to the future of the retail mobile market which will not involve Mr Teoh [TPG's executive chairman and CEO] or TPG entering the Australian retail mobile market in the next five years" (full judgement here). Earlier this month the ACCC flagged away appealing.

Incidentally, as any of us who have to try and guess where competition litigation will go will agree, you have to tip your hat to Tony Boyd, the Chanticleer columnist at the Australian Financial Review, who in a (possibly paywalled) piece 'ACCC misreads mobile market' back in May 2019 absolutely nailed it: "ACCC chairman Rod Sims is headed for what is almost certainly an embarrassing defeat in court ... Rod Sims is kidding himself if he thinks the Australian Competition and Consumer Commission can win". He got it bang on: Justice Middleton could have saved himself most of his 899-paragraph judgement if he'd just copied and pasted Boyd's conclusion that "The problem with the assumption that TPG’s executive chairman David Teoh will spend billions of dollars building a new network is that it is completely without foundation".

So even against an appropriately heightened sense of scepticism about the merits of even further mergers, ones will still pop up there may be no loss of competition compared with the no-merger counterfactual (as in TPG-Vodafone) or there is the procompetitive emergence of a more effective post-merger competitor (T-Mobile-Sprint). Whether any of these arguments apply to the other behemoth out there - if it's survived the recent market havoc, the proposed merger of  the global number two and number three insurance brokers, Aon and Willis Towers Watson, to create a new number one - will remain to be seen. There look to be a good deal of potential back-office efficiencies, but whether they, and the claimed capability synergies, make up for the potential reduction in competition is debatable.

Finally, the latest ComCom telco report got me digging in the archive. Here are a couple of graphs from the very first telco monitoring report, published back in 2008.

Nor pretty at all back then, was it? The improvement since then, especially on the mobile side, has been enormous. And a lot of it goes to prove Philippon's points: for a good competitive outcome you can't beat new entry (particularly 2degrees) and entry-facilitating regulation (a whole swathe of things, from early 'ladder of investment' ideas like wholesale access through to mobile termination regulation and local loop unbundling).

One Rule to bring them all and in the darkness bind them

"Chatham House rules", said the invite, though as Chatham House itself says, "There is only one Rule", namely

When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed.

So let's just say I've been at a forum where two items got discussed - whether the institutional set-up of the Commerce Commission is all that it might be, and whether our Court of Appeal threw a lit firework through the windows of the Commerce Act.

The first bit was partly a push-back response to the New Zealand Initiative's 2018 Who Guards the Guards? - Regulatory Governance in New Zealand (media release here, fuller version here), but even if the Initiative had never raised it, it's a good idea to talk about, and MBIE or ComCom itself also ought to be kicking the tyres from time to time and checking that processes and policies are fit for purpose.

The Initiative argued that "the separation of board and executive functions at regulators like the FMA [Financial Markets Authority] contributes to greater accountability and to greater levels of expertise.  Commission models like the one in place at the Commerce Commission fared worse". In other words, in the Initiative's preferred state of the world, Commissioners would set the general strategic direction of the place, and hold the CEO accountable for delivery, in the way that a corporate board would, but the CEO and the staff would make the actual decisions on mergers, trade practices, and sector regulation.

I didn't find the Initiative's conclusions persuasive at the time about ComCom, and after this latest forum I remain unconvinced. It's true that the Initiative were onto a worthwhile topic, and also true that the data they collected from survey respondents on a wide range of regulators (which you can download for yourself here) were fascinating. But if you unpack ComCom's performance, you find some interesting patterns.

Its worst performance on the 23 criteria the Initiative canvassed came from "The ComCom understands the commercial realities facing your industry", where 57.9% strongly disagreed or disagreed. On its face, you can see why the Initiative would then call for "broadening the skills set of the commissioner/board members of the commission to include members with industry expertise".

But hang on: when asked whether "The leaders of the ComCom are skilled, knowledgeable and well-respected by businesses in your industry", they came out well, with only 18.9% strongly disagreeing or disagreeing. The staff at ComCom, ditto, with only 19.4%. That's hard to square with the picture of clueless wallies.

The simplest explanation of these two contrasting pictures is that the "you don't understand our industry" response is special pleading. "If only you understood airlines/electricity/shipping/insert professional service here, you'd realise why we need to be able to agree on prices/set capacity/restrict entry". And you might start thinking dark thoughts about regulatory capture if the likes of a ComCom ever got too-high marks for helpfully going along with old Spanish practices.

The next worst ComCom score, by the way, was on the question, "You are not hindered or deterred from taking action to improve the profitability of your business by any lack of predictability in the ComCom's decision-making", with a 54.1% thumbs down. Noting that this doesn't really speak to the issue of form of governance - a structure where the staff make the calls could be just as unpredictable as one where Commissioners do - my guess is that the low score says more about the state of New Zealand competition law (and in particular around the state of the law on abuse of market power)  than about ComCom structure or process.

At the forum I was at, the point was made that maybe we ought to have a comprehensive review of our competition law, as the Aussies did in 1993 (the Hillmer review) and again in 2015 (the Harper review). I tend to agree, though clearer or better legislation won't be the complete silver bullet: drawing the appropriate line between vigorous competition from big players and anti-competitive use of market power remains problematic in every jurisdiction, irrespective of the wording of the law. But taking whatever steps we can to clear the air (and adopting Australia's "effects test" would be a good start) would go some way to address the uncertainty the Initiative's respondents were voicing.

Finally, the other major area the Initiative survey identified as a concern was "The ComCom is readily held to account for the quality of their work (including any mistakes) by its responsible government department, minister, or some other effective external accountability mechanism", where 44.1% were unhappy. This seems to be a widespread concern across all 24 regulators asked about: the average answer is 43.4%, so ComCom's rating is entirely typical.

My personal feeling is that in ComCom's case the response may reflect the lack of visibility of the accountability mechanisms, which are stronger than people may realise. If, for example, you had to operate within and report on the tightly hypothecated budget buckets that MBIE makes the Commission use, I'd bet you wouldn't like it. And while Select Committee oversight tends to be for policy trainspotters rather than for the wider community, Committee members can be robust in their attitudes to the Commission (as I noticed for myself when I turned up to argue the case for the Commission being able to initiate market studies). Again, the state of the law may also be a factor: ComCom in its everyday business isn't subject to "merit reviews" through the courts. It can be challenged on the law, or on due process, not on substance. You can understand why people might feel frustrated at not being able to relitigate the facts.

While I'm sympathetic to the Initiative's accountability concerns, I'm not sure that the corporate board model is the right one in this quasi-judicial context, a point also made at this forum. I wouldn't want a Supreme Court sitting back and managing the clerks' budgets, while the (nameless?) clerks make the decisions.

The second part of the forum dealt with the possibility that the courts may have further muddied the legal waters, by calling into question how the Commerce Act is supposed to work. The case  is the Court of Appeal's 2018 NZME/Fairfax judgement, and the argument is about how you decide whether something is on balance a good idea, after taking all the benefits and detriments into account.  Is the test, the country as a whole will be better off (a "total welfare" standard)? Or is it, consumers will be better off (a "consumer welfare" standard)? Or something in the middle where the country's better off and at least some consumers see some of the benefits (a "modified total welfare" standard)?

At the time (including in my own coverage) the big issue in the NZME/Fairfax case was seen as what things can properly be counted as benefits or detriments, with a big focus on whether ComCom was entitled to count loss of media plurality as a detriment (it was). Nobody paid huge mind to the bits of the judgement dealing with 'The Act's objectives' in [42] to [53], with Australian precedents in [66] to [68], or the punchline in [75]. Essentially, the judgement said, "Look, ComCom, you've always used a total welfare standard. You seem to think the courts required you to. Don't know about that - we in this court certainly didn't. And at a minimum you're certainly free to use the modified total welfare standard if you want to. You call it like you see it, and we'll tell you if you've gone wrong".

My inclination is towards a total welfare test, even if it leads you down the odd uncomfortable path: the example everyone mentions is the Commerce Commission's 2015 wool scouring authorisation. There, there were consumer detriments (higher prices as a result of the market power of the merged-to-monopoly incumbent), offset by efficiencies from rationalising production facilities. The total welfare standard says money may have moved from consumers' to producers' pockets, but so what: the country's better off not tying up unnecessary resources in wool scouring plants. The consumer welfare standard says, get outta here.

Perhaps nobody will follow up the Court of Appeal's musings on the meaning of it all. But it is odd, to say the least, that this late in the game - the Commerce Act dates back to 1986, and its current purpose statement to 2001 - people are still wondering what, if anything, the legislators meant to achieve. Did the new purpose statement - "to promote competition in markets for the long-term benefit of consumers within New Zealand" - mean to enshrine a consumer welfare standard? If it didn't explicitly, can or should a consumer welfare standard be read into it?

There's a huge debate underway overseas about whether competition and merger enforcement has gone soft, particularly in the US: mergers, the argument goes, have been let through that shouldn't have been, and the big guys have been allowed to throw their market power around to ill effect. If you haven't read Thomas Philippon's The Great Reversal: How America Gave Up on Free Markets, now would be a good time. Against that background, maybe we should sort out our own thoughts in our own heads, too, and sit down and have a ground zero reassessment of what sort of competition law we ought to have.