tag:blogger.com,1999:blog-73425280226175015252024-03-14T22:55:43.059+13:00Economics New ZealandDonal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.comBlogger659125tag:blogger.com,1999:blog-7342528022617501525.post-25750217660583080122024-02-29T15:33:00.000+13:002024-02-29T15:33:01.825+13:00Inflation and the output gap<p>Yesterday's <a href="https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/publications/monetary-policy-statements/2024/feb/mps-feb-2024.pdf" target="_blank">Monetary Policy Statement</a> from the Reserve Bank said (eg at p ii) that "a sustained decline in capacity pressures in the New Zealand economy is required to ensure that headline inflation returns to the 1 to 3 percent target": the economy needs to move from a hothouse above-capacity state (a 'positive output gap' with people trying to chase after scarce resources, driving up their prices) to a below-full-capacity state (a 'negative output gap', where resources are more available and less in demand).</p><p>Here's what the relationship that's being relied on has looked like over the past twenty odd years. It shows how the output gap has affected domestically-generated ('non-tradables') inflation. The numbers come from the underlying data supporting the Statement, which the RBNZ helpfully supplies as <a href="https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/publications/monetary-policy-statements/2024/feb/mpsfeb24-data.xlsx" target="_blank">a spreadsheet</a>. I've taken the impact of the 2010 GST increase out of the inflation data. I've also advanced the output gap by three quarters, which looks to be a good stab (tested by a couple of quick regressions) at the lag between the hot or cold state of the economy and subsequent heating up or cooling down of inflationary pressures.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiknUCYQyxXPwHyT0HqfTDwRBZAFQC5At9Wf7nrfAuUNX-UmQRg4p3U-ACp2BBjxbzrCgyYGEGs8fPQLv67tD76RQ3bCoTtP8QseUnKPa_sEyjfuCIiqQIFcS9eTUj9uUbk0oWxY2RAMyRzbBSdkAR9gmBRLIG9G_KSGkkup-_k0yclwvu8RV0moUYSL_I/s2472/OG%20and%20NTI.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1787" data-original-width="2472" height="462" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiknUCYQyxXPwHyT0HqfTDwRBZAFQC5At9Wf7nrfAuUNX-UmQRg4p3U-ACp2BBjxbzrCgyYGEGs8fPQLv67tD76RQ3bCoTtP8QseUnKPa_sEyjfuCIiqQIFcS9eTUj9uUbk0oWxY2RAMyRzbBSdkAR9gmBRLIG9G_KSGkkup-_k0yclwvu8RV0moUYSL_I/w640-h462/OG%20and%20NTI.jpg" width="640" /></a></div><p>It's a reasonably robust relationship (a simple regression had an R squared of 0.54) but it's obviously not infallible. In the mid 2000s for example the economy ran quite hot but non-tradables inflation never picked up, and the years immediately before Covid also saw the economy in reasonably good fettle without provoking the inflation genie. But that said, and especially when there are really large moves (the post GFC slump, the post-Covid fiscal and monetary policy fuelled boom), it holds up pretty well.</p><p>Two things struck me when I looked at the chart. One is that the RBNZ is projecting a large move in the output gap by historical standards. Peak to trough, the GFC setback amounted to a 5.8% of GDP swing, from 2.8% above capacity to 3.0% below it. The projected move in coming years is almost as large: a 5.5% swing from 3.9% above full capacity to 1.6% below. Maybe that will indeed happen as monetary policy continues to bite, fiscal policy very likely turns less supportive and strong net immigration swells the available labour supply. I wouldn't say it's an implausibly big or improbable ask to see a turnaround of that order, but getting on top of inflation is reliant on a pretty large change in economic conditions coming to hand.</p><p>The other thing that struck me is that if the output gap does indeed evolve as the RB expects, non-tradables inflation might even drop more than projected. My little regression says that if we get down to a negative output gap of -1.6%, non-tradable inflation (with a three quarter lag) would get down to 2.3%, a bit lower than the 3.0% the RBNZ anticipates. Or put it another way: the 3% or so non-tradables inflation the Bank expects is the sort of outcome you'd get if the economy was roughly at a Goldilocks zero output gap, neither too hot nor too cold. If we actually stay below that level (as the Bank thinks), non-tradables inflation could well recede more than currently anticipated.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-59011079874864143252024-02-22T16:34:00.001+13:002024-02-22T16:35:45.232+13:00The New Zealand Economic Forum - Day 2<p>We kicked off Day 2 with a keynote speech, "The monetary policy remit and two percent inflation", by Adrian Orr, governor of the Reserve Bank, delivered online (full text <a href="https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/events/2024/02/the-mpc-remit-and-2-percent-inflation.pdf" target="_blank">here</a> or watch the video <a href="https://www.youtube.com/watch?v=tJA0BVv_IaQ" target="_blank">here</a>) after Adrian came down with a late lurgy (a pity, as I'd looked forward to chewing the fat about the forthcoming NRL season with my fellow Warriors tragic).</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEii-2fheA6gZFPl1gci3-X5FJXRyO_F0yLqe9yQnj0a66ys77Zm7wHzC54N0b8VCQxMWALEws_v1s1p7lybAd3dkEdEzwY2vai7SUZ8RdqXpcuzKbpYFPMby3cQZzC2Bmz2v0rRg92S8x3xca6wUWlHbkA0y0liAFQSEyoVinLICEmoDqLosMTbVa0v0gw/s2399/IMG20240216075156_ed.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1592" data-original-width="2399" height="424" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEii-2fheA6gZFPl1gci3-X5FJXRyO_F0yLqe9yQnj0a66ys77Zm7wHzC54N0b8VCQxMWALEws_v1s1p7lybAd3dkEdEzwY2vai7SUZ8RdqXpcuzKbpYFPMby3cQZzC2Bmz2v0rRg92S8x3xca6wUWlHbkA0y0liAFQSEyoVinLICEmoDqLosMTbVa0v0gw/w640-h424/IMG20240216075156_ed.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Adrian Orr with one of his slides, showing that core inflation as it actually transpired over 2020-22 was stronger than the lower real-time estimates available when decisions needed to be made (with Waikato's Prof Matt Bolger as moderator)</td></tr></tbody></table><p>Takeaways? Some sympathy for the RBNZ's (and other central banks') challenges over the past few years: Covid, where Adrian reasonably asked, which mistake did you most want to avoid in the high-uncertainty crisis, and the answer was too-tough policy that might aggravate a downturn, hence the almost universal let-it-rip of both fiscal and monetary policy; the Team Transitory/Team Core debate; the interruption to normalisation from the Auckland lockdown; the Ukraine; and a recent rise in household inflation expectations. </p><p>Expectations - which are interlinked with people's trust in the competence of a central bank (what us older folks used to call 'credibility') - look high on the bank's agenda. I noted in the speech that while inflation has come down, "tackling the tail end of these persistent inflation pressures in the domestic economy remains key to achieving 2 percent inflation. Just how persistent these pressures might be depends on how factors, such as capacity pressures and inflation expectations, evolve going forward". Adrian was giving nothing away about the next monetary policy decision (February 28) but if I were in the room I'd be looking at the latest annual non-tradable inflation rate (5.9%) and wondering if those capacity pressures and expectations levels needed a further knock on the head.</p><p>Onwards to fiscal policy, first with a keynote from Caralee McLiesh, Secretary to the Treasury, followed by a panel discussion on 'Treasury and the state of the books'.</p><p>Caralee's speech doesn't appear to be up on the Treasury website, but you can get the gist of it from the excellent <a href="https://www.treasury.govt.nz/sites/default/files/2024-02/bim-finance-slide-pack-2023.pdf" target="_blank">'Economic and Fiscal Context Slide Pack'</a> which was part of Treasury's <a href="https://www.treasury.govt.nz/publications/bim/briefing-incoming-minister-finance-2023" target="_blank">Briefing to the Incoming Minister of Finance</a>. A key point was that our fiscal deficit is structural, not cyclical: as Caralee said, it tends to be easy to loosen fiscal policy in a downturn, and a lot harder to wind back the spend in better times, and we've now reached the point where belated policy tightening is needed (we'd got the same message from Nicola Willis the previous day). "Difficult distributional decisions lie ahead": quite.</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1PckGWgE5M2Pf1pT8ehVrZU0wvNkDIJY0LUWWOGhFFcn_8bk7L0yQILWokb3yHZP-VE7_aoq8EP3DVXm4GwLf6tkN0gy8MA2CTSyvbvytwHALbZNg8XpKMsYVAQfTBGMCBtFtF1D8EVoMJ4JCXQLEbfyienD3eew-Y1pVXA11zIGaiD-JaGhYkHs_zg4/s3825/IMG20240216090033_ed.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="2650" data-original-width="3825" height="444" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1PckGWgE5M2Pf1pT8ehVrZU0wvNkDIJY0LUWWOGhFFcn_8bk7L0yQILWokb3yHZP-VE7_aoq8EP3DVXm4GwLf6tkN0gy8MA2CTSyvbvytwHALbZNg8XpKMsYVAQfTBGMCBtFtF1D8EVoMJ4JCXQLEbfyienD3eew-Y1pVXA11zIGaiD-JaGhYkHs_zg4/w640-h444/IMG20240216090033_ed.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Treasury Secretary Caralee McLiesh speaking to our rise in net public debt</td></tr></tbody></table><p>The 'State of the books' panel - <a href="https://www.linkedin.com/in/craig-renney-2044a025/?originalSubdomain=nz" target="_blank">Craig Renney</a> from the CTU, <a href="https://www.nzinitiative.org.nz/about-us/our-people/eric-crampton/" target="_blank">Eric Crampton</a> from the New Zealand Initiative, <a href="https://www.nzier.org.nz/about/staff-directory/sarah-hogan" target="_blank">Sarah Hogan</a> from the New Zealand Institute of Economic Research - may have been intended to have been a battle of "duelling economists", as one person put it, but it turned out to be a lovefest of harmony and mutual understanding which coalesced around the theme of the importance of getting the best value for money from the public spend. </p><p>As Craig said, there's nothing inherently "right-wing" in demanding value for money and nothing inherently "left-wing" in spending the right amount. Sarah pointed to health as one area where we are not getting value for money: Pharmac (she said) may take its lumps from its critics, but on the other hand it is a rare example in the sector when it comes to revealing its prioritisation. Other areas are either not transparent, or may not even prioritise in the first place. Eric would like us to retreat from the post-Covid spending bloat, perhaps to the same share of GDP that the Wellbeing Budget of 2019 represented (core crown spending of 29.1% of GDP, compared to the 33.0% expected for 2023-24 in last year's Budget forecasts): one reason was that people would be less likely to sign up to future rainy day spendups if they see previous ones sitting there unpaid for. And all the panellists were very keen on a really rigorous framework of prioritisation and evaluation: as Craig put it, "Think hard, and then think hard again".</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAbYa-I9EvIdPmgVB6qFCjI5fh6myDsolseLHW9AT_G-PiQHECGrHimteW4I8ftfiydQ70LAAz69ClPM6BrsWXNGzMq9A3JKQjEG-xbFS3eD5O9ksHJfM-mRCXF464leIhxqsisqv-_miZGBZL3P11OeWirl4mHXeQE-85K_LRrwEBSU786EyKYe8QGl0/s2927/IMG20240216092105_ed.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1518" data-original-width="2927" height="332" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAbYa-I9EvIdPmgVB6qFCjI5fh6myDsolseLHW9AT_G-PiQHECGrHimteW4I8ftfiydQ70LAAz69ClPM6BrsWXNGzMq9A3JKQjEG-xbFS3eD5O9ksHJfM-mRCXF464leIhxqsisqv-_miZGBZL3P11OeWirl4mHXeQE-85K_LRrwEBSU786EyKYe8QGl0/w640-h332/IMG20240216092105_ed.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">The "duelling economists": Craig Renney, Eric Crampton, Sarah Hogan, with (on left) panel moderator Waikato's Prof Anna Strutt</td></tr></tbody></table><p>Then we got a panel on 'Infrastructure: Unclogging the arteries', a topic close to my and I'd guess every other New Zealander's heart, given the increasingly shabby state of virtually all the infrastructure we use, from hospitals, classrooms, and roads to those infamous three waters. I drove down to Hamilton from outside Warkworth. The good news is that Warkworth to the approaches to the Harbour Bridge went fine (thanks to the new Puhoi motorway extension, even if it took forever to build), and Drury to Hamilton was fine (thanks to the new Waikato Expressway, also remarkably protracted). The bad news was that the intervening Harbour Bridge to Drury stretch remains an absolute nightmare, undoing a fair amount of the Puhoi/Waikato benefits, and the throttleneck looks like staying that way for some considerable time. There's a huge deferred bill looming: one speaker mentioned the Infrastructure Commission's estimate that we will need to spend $30 billion a year for the next 30 years.</p><p><a href="https://www.transpower.co.nz/about-us/who-we-are/executive-leadership-team" target="_blank">Alison Andrew</a>, CEO at Transpower, told us that while the current transmission grid is in good shape, (a) most of it was built in the '50s and '60s and is getting to its use-by and (b) there's an opportunity to green the country through electrification, but we will need 22 gigawatts of generation (and associated transmission) compared to today's 10 gigawatts. She didn't say it, but I personally wondered why the Commerce Commission regulates Transpower in 4-5 year bites, rather than over a longer-term horizon. <a href="https://www.tgh.co.nz/about-tgh/our-people/senior-leadership-team/" target="_blank">Chris Joblin</a>, CEO at Tainui Group Holdings, said it wasn't so much unclogging the arteries that's needed, but more like a double or triple bypass after being on the fags since the '70s: we just haven't being looking after our infrastructural health. And when we do bestir ourselves, the consenting takes forever: he mentioned that it took 17 years to get Tainui's inland port at Ruakura (just beside Waikato University, as it happens) up and running. Among the issues: we look for perfection, which causes procrastination, and we load too many objectives onto projects, blowing out the costs and causing further rethinks. And <a href="https://infrastructure.org.nz/about-us/our-team/" target="_blank">Nick Leggett</a>, CEO at Infrastructure New Zealand, agreed that we need to get our project management process right: we can occasionally rise to the occasion but mostly we're bad at it.</p><p>In passing, if the planning and project mismanagement omnishambles gets your goat, too, you'll like Daryl McLauchlan's piece for <a href="https://democracyproject.substack.com/" target="_blank">Democracy Project</a>, <a href="https://democracyproject.substack.com/p/unjarndycing-the-state" target="_blank">'Unjarndycing the State'</a>. And if you'd like a piece on how we might do better, here's one I prepared earlier for <a href="https://www.acuitymag.com/" target="_blank"><i>Acuity</i> magazine</a>, <a href="https://www.acuitymag.com/opinion/getting-results-donal-curtin" target="_blank">'Getting results'</a>.</p><p>Life's too short, so I'll just pass briefly over the final two sessions. 'Climate & Weather: So what happens if we don't curb emissions?': answer, bad stuff, and for some of the same reasons that our infrastructure record is so poor. As <a href="https://en.wikipedia.org/wiki/Brian_Roche_(business_executive)" target="_blank">Sir Brian Roche</a> said, we make a virtue of recovery from disasters, but we don't provide for preparedness in the first place. If 'value for money' was a recurring theme of the Forum, 'dynamic inefficiency', not investing enough to keep the show on the road, ran it a close second.</p><p>And in 'Fintech Futures: The end of cash?', no, cash is not dead, with the RBNZ's <a href="https://www.rbnz.govt.nz/about-us/our-people/our-executive-leadership-team#Karen_Silk" target="_blank">Karen Silk</a> reminding us of why we still use it (full and final settlement, in privacy, plus benefits when, say post-Gabrielle, the ATMs and EFTPOS go down). And on the fintech side, we've had some successful financial innovation - we heard from <a href="https://www.linkedin.com/in/brooketanderson/?originalSubdomain=nz" target="_blank">Brooke Roberts</a>, co-CEO of one of the successes, Sharesies - and while Brooke hoped that we will eventually have a global fintech come out of New Zealand, it's generally not as easy to get things up and running as it is in, say, Australia. <a href="https://www.linkedin.com/in/shane-marsh-ba10312/" target="_blank">Shane Marsh</a>, cofounder of DOSH, also wondered about us falling behind. In my mind, I've always thought of New Zealand as a digitally advanced place - we were using EFTPOS for everything when our friends and rellies in Ireland, the UK or the US were still writing cheques - but the world's moved on, and we haven't. In Shane's view, our payments landscape is now well behind the rest of the world and even behind some of the 'developing' world .</p><p>Matt Bolger, Pro Vice-Chancellor of the Waikato Management School, sent us on our way with an uplifting message. While it's tempting to think that today's rate of change is unprecedented, Matt said we shouldn't get so up ourselves: how do we compare, really, with the generations who went through the Great War, the Depression, fascism and communism, and World War Two? And despite our current inability to plan properly for tomorrow's challenges, maybe he's right that we shouldn't get overwhelmed, and we should stay optimistic. It would be nice to think that New Zealand Economic Forum 2025 will be able to document that we're getting more of a grip on the issues that face us.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-62312423878671975172024-02-21T17:05:00.003+13:002024-02-21T18:58:49.226+13:00The New Zealand Economic Forum - Day 1<p>The University of Waikato's <a href="https://events.waikato.ac.nz/events/new-zealand-economics-forum-2024" target="_blank">New Zealand Economic Forum 2024</a>, on the theme of 'A briefing to the incoming government', kicked off in Hamilton last Thursday with <a href="https://www.beehive.govt.nz/speech/speech-address-nz-economics-forum" target="_blank">a speech by Finance Minister Nicola Willis</a> (below).</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh56_xXtPUDYpM6qL61U6qQMIOvMXsm98JlyYJxUpIfixQVYpWKx3g1mMS3A0j3DqqD3R-848qoNGiJ7145Eabnqc_PHnm3DG_tsIi71HEQDalNYPHJbPhkUefO0rwj8BG-4oO_klMVG5ZS_lrPc1Kef94AwyGolUOb6uWXVadzeQfnvLz72PBXuK9ce2Q/s2648/IMG20240215091923_ed.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1897" data-original-width="2648" height="458" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh56_xXtPUDYpM6qL61U6qQMIOvMXsm98JlyYJxUpIfixQVYpWKx3g1mMS3A0j3DqqD3R-848qoNGiJ7145Eabnqc_PHnm3DG_tsIi71HEQDalNYPHJbPhkUefO0rwj8BG-4oO_klMVG5ZS_lrPc1Kef94AwyGolUOb6uWXVadzeQfnvLz72PBXuK9ce2Q/w640-h458/IMG20240215091923_ed.jpg" width="640" /></a></div><p>Nothing headline-making, but solid stuff: I liked the aim to lift our growth rate by removing go-slow regulation, the plan to have fast one-stop consenting for major projects, and to have more 'social investment', meaning prioritising social spending on the groups most at risk of being stuck in persistent disadvantage. In Q&A, someone asked about investment plans: there's apparently going to be a coordinated 30 year pipeline of projects, and about bleeding time. There are decision-making models maintained in the public sector that let you assemble optimal investment portfolios, and they badly need to be deployed, however belatedly, to make our infrastructure spend all that it can be. Chatting to another attendee afterwards, he wondered if the benefits and costs you need to feed into those models were reliable enough to avoid garbage in, garbage out results, but anything's got to be better than the lack of coordination we've had up to now.</p><p>The next two topics - agriculture and health - weren't my thing, but they had their moments. In agriculture, I'd never heard of <a href="https://www.agrizero.nz/" target="_blank">AgriZeroNZ</a> before: "A partnership between the New Zealand government and major agribusiness companies, we're helping farmers reduce emissions while maintaining profitability and productivity". Good stuff. In health, I heard a lot of sense from <a href="https://www.nzinitiative.org.nz/about-us/our-people/des-gorman/" target="_blank">Professor Des Gorman</a>. He said that we don't have a 'health' system, we have a disease and injury management system, paid for on annual levels of activity, which is self-evidently not ideal. He argued for a better 'tight, tight, loose' system focused on value for money: it would be tight in defining the health outcomes you'd like to see, tight in measuring what providers actually achieve, but loose or agnostic about what sort of providers you use. For those who would cry 'privatisation' of the public health system, his answer is that the system is largely private already, notably including your local GP practice. And for those worried about those dreadful private providers making a profit, in a competitive value-for-money system the answer is, "They're delivering more for less. What bit don't you like?".</p><p>After lunch we had a choice of 'Demographics are history' or 'Running tax differently', and my inner nerd chose tax. <a href="https://srgexpert.com/our-people/dr-graham-scott/" target="_blank">Graham Scott</a> (gamely filling in for the unavoidable late withdrawal of <a href="https://www.maxrashbrooke.net/" target="_blank">Max Rashbrooke</a>, also contactable <a href="https://www.maxrashbrooke.net/" target="_blank">here</a>) reminded us that tax has its own comparative advantage - it has things it can and cannot do - and threatening to load it with multiple policy aims risked taking us back to the bad old days when we had a mad patchwork of specific sales taxes and other distortions and complexities. PwC's <a href="https://www.pwc.co.nz/contacts/s/sandy-lau.html" target="_blank">Sandy Lau</a> was mostly happy with things as they are, though wondered if we need capital gains taxes, if only to reduce our currently disproportionate reliance on personal income tax. And Victoria's <a href="https://people.wgtn.ac.nz/lisa.marriott" target="_blank">Professor Lisa Marriott</a>'s main point was over enforcement: she felt genuinely ratbag behaviour wasn't being sufficiently prosecuted by the IRD. Not only were people getting away with malfeasance, tax compliant businesses were being put at a competitive disadvantage relative to the scofflaws.</p><p>The session on 'Social investment: What difference will it make', led to a strong consensus that (a) there is a large group of people who suffer from persistent disadvantage (b) current social policy isn't cutting the mustard (c) by finding out what these people most need we can get better much better results especially if we focus on value for money from what we do and (d) we should regard what we do as an investment in people rather than as a cost. As <a href="https://whanauora.nz/our-people" target="_blank">Merepeka Raukawa-Tait</a> put it, the time for wasted spending is over. Subsequent speakers pointed to a dramatically successful example that <a href="https://impactlab.co.nz/about-impact-lab/" target="_blank">Maria English</a> gave us, where providing tailored housing to a particular person saved nearly all of the very expensive 100 nights a year they'd previously been spending in a hospital bed. The session made complete sense to me, and I was quietly bemused how the winds have changed since Bill English (Maria's dad) championed this very approach, and got roundly rubbished for it.</p><p>My initial reaction to 'Trade: Dealing with a divided world' left me worrying: there's been an end of the "golden weather" of increasingly free and rules-based trade. Now there's fragmentation, rules flouting, disempowerment of the World Trade Organisation, protectionism, and 'security' concerns (real and paranoid). It very much felt like the trade front of Cold War II. MFAT's <a href="https://www.mfat.govt.nz/en/about-us/our-people/vangelis-vitalis/" target="_blank">Vangelis Vitalis</a> replied to my downbeat tweet that "I hope the conclusion left you feeling more positive, i.e. we have a plan, agency, new options & advantages in key markets and are determined to protect and defend our hard won benefits through FTAs", and that we are showing "Policy entrepreneurship in international trade policy". He'd mentioned, for example, us successfully taking Canada on about their dairy trade protectionism. All fair comment, and it's good to know we're fighting our corner, but it's still a trickier wicket to bat on than it was before.</p><p>And the day wrapped with a session chaired by <a href="https://www.linkedin.com/in/steven-joycenz/?originalSubdomain=nz" target="_blank">Steven Joyce</a> on 'Monetary policy: Controlling what we can control'. <a href="https://www.wgtn.ac.nz/sef/about/people/grant-spencer" target="_blank">Grant Spenser</a>, ex deputy governor at the Reserve Bank, reminded us that the RBNZ, when <a href="https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/publications/monetary-policy-statements/2022/rafimp---in-retrospect-monetary-policy-in-new-zealand-2017-22.pdf" target="_blank">it last reviewed how it had been going</a>, found nine things it could work on, and wondered how they were getting on with them: he also noted that there appeared to be quite a blowout in operational spending and in headcount over the past six years. He also wanted to see more of a challenging culture at the Monetary Policy Committee from the independent members. I totally agreed: Australia's moved in that direction recently as well, with a boost in expertise and a requirement that independent members put their view into the public domain at least once a year. <a href="https://www.nzinitiative.org.nz/about-us/our-people/bryce-wilkinson/" target="_blank">Bryce Wilkinson</a> revisited some of the territory he'd covered in his publication co-authored with Graeme Wheeler, <a href="https://www.nzinitiative.org.nz/reports-and-media/reports/how-central-bank-mistakes-after-2019-led-to-inflation/document/785" target="_blank">'How central bank mistakes after 2019 led to inflation'</a>, reminding us that monetary policy everywhere was relied on as being more of an exact science than it actually was, and that central banks made very poor inflation forecasts, even though that was their day job. Bryce said the global financial markets had also missed what was developing. And <a href="https://www.linkedin.com/in/henry-russell-567bb227a/?originalSubdomain=nz" target="_blank">Henry Russell</a> found himself in something of the spotlight given that the ANZ Bank had just made a big off-consensus call that the RBNZ would hike rates again (two moves of 0.25%), its reasoning being that the RBNZ had indicated back in November that it had little tolerance for any upside inflation risks, but they looked like they were getting some.</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVqqiaRYrNsRY-uLY6arZiQR57VDMKy4OZuKw-h9ONGobU0jdWeL6hLKhDcycj1LFc2iahCmTRLFLeDCFYIpNgHSdC-y5zN709lO4Ll4ZgX2NfhnJAFr5udqpTHqh6Sq4y0iZdOAkG3L87VOohn27Yvp7iXqa8WLPuWSIVhx8bL6LS-pQ6sZ6Y9undhBc/s2455/IMG20240215160027_ed.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1173" data-original-width="2455" height="306" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVqqiaRYrNsRY-uLY6arZiQR57VDMKy4OZuKw-h9ONGobU0jdWeL6hLKhDcycj1LFc2iahCmTRLFLeDCFYIpNgHSdC-y5zN709lO4Ll4ZgX2NfhnJAFr5udqpTHqh6Sq4y0iZdOAkG3L87VOohn27Yvp7iXqa8WLPuWSIVhx8bL6LS-pQ6sZ6Y9undhBc/w640-h306/IMG20240215160027_ed.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">The monetary policy panel: Henry Russell (ANZ Bank), Bryce Wilkinson (Capital Economics / The New Zealand Initiative), Grant Spencer (ex RBNZ, Victoria University), Steven Joyce at the lectern</td></tr></tbody></table><p>There was a really interesting discussion after the speakers' opening remarks, including around the ANZ forecast of hikes to come. Bryce thought that interest rates were now where they out to be on a Taylor Rule basis, and also that money supply growth had slowed down to very little growth at all (the latest 'broad money' measure, for example, is up only 3.6% on a year ago), both of which argued against hikes. Grant felt that with inflation already down quite a bit, maybe it would be better to hold and stay at current rates for a bit longer to see what happens. Henry, however, said that arguably a global disinflation supporting tailwind has blown out, that domestic inflation is still not good and might surprise on the upside again, and that while the pricing indicators in the ANZ business survey have stabilised, it was an open question whether they had stabilised at a level consistent with the RBNZ's inflation target. Policy issues raised but unresolved for another day: whether unconventional monetary policies (like quantitative easing) had been worth it; how monetary policy should respond to supply shocks; and whether the RBNZ ought to be both the setter of monetary policy and the financial prudential authority. Evidence from overseas is mixed, and against the canonical practice of economists having an answer to everything, I can't say I've got any clear opinion, either.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-24424385894816879302023-12-21T12:22:00.000+13:002023-12-21T12:22:12.086+13:00The clock ran out<p>This week's 'mini Budget' was certainly down the minier end of mini, and understandably so. While I sympathise with a bias for action, and there was also a political commitment to be honoured, by the time the coalition was settled and portfolios allocated, there just wasn't enough time left on the clock to pull everything together and produce an up to date and internally consistent mini-thingie and its accompanying Half-Year Economic and Fiscal Update (HYEFU). As the HYEFU notes (p9) its forecasts were put to bed on November 6, but after that it lists a slew of events (notably the new government and its policies, and some important data releases including that weaker than expected September quarter GDP number) that haven't been able to be fully factored in. We'll have to wait for the Budget Economic and Fiscal Update (BEFU) next year for a complete and up to date view.</p><p>That said, there were a couple of interesting bits of analysis in the HYEFU. One important issue is whether the economy is still at or above capacity - if it is, there might still be lurking inflation risks emanating from domestically traded but supply constrained goods and services, if it isn't, then we might start looking ahead to eventual RBNZ easing. Here's the HYEFU take: it's reasonably encouraging from an inflation-pressure perspective. On its 'output gap' calculations, Treasury reckons we'll be going from 1% above capacity in June '23 to roughly at-capacity (-0.1% below potential output) in June '24 and to clearly below (-1.0%) potential output by June '25.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOrLD671E1I_ub7hb1if7FTszp9B4_rKEit5HwHZqOI98Ul8nferYEsmAEr_uVpuNzYxlZkJyFm6J4cbe7S4DzMqscdQFKHRYx7FVt6IyO0zGY8TJg1lUxXooWLNxt-c7vObc26OW0XVPRBlz2IIdQkamdGq6qhRrevd-n3mWSKQGsBiM89eZP0NBTLoU/s1162/hyefu%20dec%2023%20output%20gap.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="937" data-original-width="1162" height="323" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjOrLD671E1I_ub7hb1if7FTszp9B4_rKEit5HwHZqOI98Ul8nferYEsmAEr_uVpuNzYxlZkJyFm6J4cbe7S4DzMqscdQFKHRYx7FVt6IyO0zGY8TJg1lUxXooWLNxt-c7vObc26OW0XVPRBlz2IIdQkamdGq6qhRrevd-n3mWSKQGsBiM89eZP0NBTLoU/w400-h323/hyefu%20dec%2023%20output%20gap.jpg" width="400" /></a></div><p>That all depends, though, on whether you can get a good handle on potential output - the maximum level of GDP growth we could manage on a sustainable basis - and I don't envy the Treasury analysts their task ("There is considerable uncertainty surrounding the degree of excess demand in the economy" - HYEFU p14). One big uncertainty is how much of the recent immigration-superpowered increase in labour supply feeds into what GDP it will produce. Another is likely productivity growth, which recently has been all over the place, as the graph below shows, and it would be a brave person who claimed to know where it was going next. You'd think there might be a chance that post-Covid business practices (working from home, greater flexibility, less command and control), might be about to deliver some kind of productivity payoff, but then again maybe not: after all, over the 13 years in the graph, we've only managed to eke out a 0.3% a year productivity gain, and only a small part of it came in the most recent few years.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqyuG3L2M1hP9RbPmRWY20Ne4zorYHyv5_6AOcz3hoPCPb2NoGv4zhVPlAJtktmUZ4Ygo3AF4IdqSaSDHnvNdpOjd50MB6NQytG9aFvdmfOAYABBBNFNRWi68wnNsbIR-lmp4f7PnioY5EXRaw6JxPbkDrcaqJMbAj1s8zBFTC_0xfbLqp5n9tW3LhpRE/s1127/hyefu%20dec%2023%20mfp.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="912" data-original-width="1127" height="324" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhqyuG3L2M1hP9RbPmRWY20Ne4zorYHyv5_6AOcz3hoPCPb2NoGv4zhVPlAJtktmUZ4Ygo3AF4IdqSaSDHnvNdpOjd50MB6NQytG9aFvdmfOAYABBBNFNRWi68wnNsbIR-lmp4f7PnioY5EXRaw6JxPbkDrcaqJMbAj1s8zBFTC_0xfbLqp5n9tW3LhpRE/w400-h324/hyefu%20dec%2023%20mfp.jpg" width="400" /></a></div><p>Finally, for me one of the most important bits in any HYEFU or BEFU is the degree to which the fiscal policy stance is stimulatory or contractionary, and whether the stance matches with the state of the business cycle (a 'pro-cyclical' stance, making booms even boomier and downturns even gloomier, being the trap to avoid). Here's the latest stab at the 'fiscal impulse', the degree to which underlying fiscal policy is looser or tighter than the year before.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibbroXvlXvn9IimmRmE1ks89Up_NedD57lEFwcc5b70HwRFVyjzqXxgESLWFmZmdDwYtagpNC16_JLTdHhC0UNhwqpyWe3PQAgGhlSxkHfxz3mZNg3V6sTpFWxQ_8jcwUPFxCeo9tDDMaB9-qqlT8_mnETvsRSdim6ze-lYtBUGl73M52y22wTj38X9lc/s1540/hyefu%20dec%2023%20fi.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1135" data-original-width="1540" height="295" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibbroXvlXvn9IimmRmE1ks89Up_NedD57lEFwcc5b70HwRFVyjzqXxgESLWFmZmdDwYtagpNC16_JLTdHhC0UNhwqpyWe3PQAgGhlSxkHfxz3mZNg3V6sTpFWxQ_8jcwUPFxCeo9tDDMaB9-qqlT8_mnETvsRSdim6ze-lYtBUGl73M52y22wTj38X9lc/w400-h295/hyefu%20dec%2023%20fi.jpg" width="400" /></a></div><p>To me, and accepting that some of the spend was in response to North Island weather events, the fiscal policy stance for the 2023-24 year was inappropriately procyclical. In June '23 the unemployment rate was only 3.6%: the economy didn't need a fiscal boost. And it also put fiscal policy at odds with the tightening stance of monetary policy, which had started to apply the brakes from late 2021 and pressed harder and harder through 2022 and into this year. Monetary policy needs mates, as they say, but it ended up dancing alone.</p><p>Looking ahead, the economic outlook is not that flash: over June '23 to June '25, HYEFU expects GDP growth at a relatively slow 1.5% a year pace, and unemployment to rise from 3.6% to 5.2%. That'll be a tricky environment to be thinking about taking 2.4% of GDP out of aggregate demand (the estimate of the fiscal impulse for 2024-25). The new government will need to be careful not to turn a slowdown into something worse.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-20077311959081267652023-12-01T12:12:00.001+13:002023-12-01T12:12:54.734+13:00Competition and the coalition of chaos<p>Sounds like a Harry Potter movie doesn't it, and I couldn't resist using it as a title even though, for all the critical "coalition of chaos" knocking, there's actually a fair degree of overlap of policy ambition among the coalition troika, at least when it comes to the regulation and competition issues you and I are interested in.</p><p>To save you having to read them, I've worked my way through the two coalition agreements, National/NZ First and National/ACT, and picked out where competition and economic regulation might be up for a rethink under the new government. There's the odd regulatory thing I don't know about (for example, both ACT and NZ First want to junk the Therapeutic Products Act 2023, whatever that is) but otherwise this is a reasonably complete listing of what's likely to be in play. It's possible that some of the ideas in <a href="https://assets.nationbuilder.com/nationalparty/pages/18407/attachments/original/1695337176/Rebuilding_the_economy.pdf?1695337176" target="_blank">National's 100 point economic plan</a> might yet see the light of day, too, so I've covered that as well.</p><p>I've included some personal comments: your opinion may vary.</p><p>One thing that commentators on the coalition agreement haven't picked up on is that in the 'Preamble' to both coalition agreements there's a reference to "introducing more choice and competition into social service provision". In practical terms the main immediate outcome is likely to be in education - the ACT agreement features "Reintroduce partnership schools and introduce a policy to allow state schools to become partnership schools" and "Explore further options to increase school choice and expand access to integrated and independent schools including reviewing the independent school funding formula to reflect student numbers" - but as a wider pro-competitive principle it's a good policy stance to start with. Monopoly public sector 'take it or leave it' provision is unlikely to be the best option of meeting everyone's needs. Cushy private sector incumbency doesn't work too well either, of course: while I can't see that it's made it into any of the coalition's priority lists, I quite liked National's proposal (number 47 in its 100 point plan) to "Allow KiwiSavers to invest in more than one provider, driving innovation, boosting competition and putting downward pressure on fees".</p><p>Stepping through <a href="https://assets.nationbuilder.com/nationalparty/pages/18466/attachments/original/1700778597/NZFirst_Agreement_2.pdf?1700778597" target="_blank">the NZ First agreement</a>:</p><p>"Establish a select committee inquiry into banking competition with broad and deep criteria to focus on competitiveness, customer services, and profitability" - I'm not hugely impressed by this, partly because the Commerce Commission is already part-way through its personal banking services market study and I can't see the point of duplication (accepting that the Commission's <a href="https://gazette.govt.nz/notice/id/2023-go2701" target="_blank">terms of reference</a> may have been a bit narrow in the first place), but also because I don't think a select committee is the right forum. There's too much opportunity for grandstanding and for ritual oppositionism, while select committees are overwhelmed as it is and I don't see them being resourced well enough to handle a project of this size. Better options would be to either expand the Commission's market study or go the royal commission route: the Aussies made a lot of progress with their <a href="https://en.wikipedia.org/wiki/Royal_Commission_into_Misconduct_in_the_Banking,_Superannuation_and_Financial_Services_Industry" target="_blank">'Hayne Commission'</a>. But in any event bank CEOs and their teams and advisers can expect to be facing the third degree in some forum or other in coming months.</p><p>"Explore options to strengthen the powers of the Grocery Commissioner, to improve competitiveness, and to address the lack of a third entrant to remove the market power of a duopoly" - why not, especially in the area of supplier (i.e. grocery manufacturer) conduct. As the Grocery Commissioner recently <a href="https://comcom.govt.nz/news-and-media/media-releases/2023/the-top-3-on-the-grocery-commissioners-fix-it-list#:~:text=Suppliers%20supporting%20competition,choice%20and%20prices%20consumers%20pay." target="_blank">said</a>, "We are aware that a number of influential suppliers appear to be opting out of the RGRs’ [supermarkets'] wholesale offers and insisting on supplying direct to smaller retailers but at much higher prices, which is having a negative impact on retail competition". Whether the nuclear option of forced divestment to create the launching pad for a third entrant is on the table, who knows.</p><p>"Assess and respond to the impact that energy prices have on inflation including consumer led institutional improvements" - no, I don't know what that means, either, and it could be as innocuous as easier ways to switch suppliers to apply stronger competitive pressure (it works, <a href="https://economicsnz.blogspot.com/2019/09/did-it-work.html" target="_blank">as I experienced myself</a>), or something along the 'New Reg' arrangement Australia has experimented with (described <a href="https://economicsnz.blogspot.com/2019/07/ive-been-to-conference.html" target="_blank">here</a>), but it could also hint at a greater interest in control of retail prices.</p><p>"Investigate the threshold at which local lines companies can invest in generation assets" - my days of looking at requests for cross-sector involvements under the Electricity Industry Reform Act are long past, but insofar as I remember any of it, why not.</p><p>"Require the electricity regulator to implement regulations such that there is sufficient electricity infrastructure to ensure security of supply and avoid excessive prices" - seems reasonable, especially with the looming challenge of provisioning electric vehicles.</p><p>"Examine transmission and connection pricing to facilitate cost effective connection of new renewable generation resources, both on-shore and off-shore" - can't argue with that either, while hoping that it doesn't degenerate into the usual "you pay", "no, you pay" buckpassing.</p><p>"Require Medsafe to approve new pharmaceuticals within 30 days of them being approved by at least two overseas regulatory agencies recognised by New Zealand" (also word for word in the ACT coalition agreement) - as I understand it, a policy win for the New Zealand Initiative and/or its chief economist Eric Crampton, and wholly sensible. One of the bigger impediments across areas as diverse as building materials and medicines is the potentially anti-competitive barrier of unnecessarily high, or expensive, 'health and safety' non-tariff barriers, and we could usefully dismantle quite a few of them. In general we should efficiently free-ride on other respectable countries' testing or experience: I've always liked the idea, for example, of using overseas prices for telco services as a first sighting shot on what the local regulated price should be. Along similar lines National's 100 point plan had as number 32, "Strengthen competition for building materials with automatic approval for appropriately certified building materials from the US, Europe, the UK and Australia".</p><p>"Better recognise people with overseas medical qualifications and experience for accreditation in New Zealand" - same again. Unnecessary 'credentialism' and conveniently incumbent professional licencing 'gatekeepers' need to have their wings clipped. Same sentiment in the ACT agreement with its "Better recognise people with overseas medical qualifications and experience for accreditation in New Zealand including consideration of an occupations tribunal".</p><p>Turning to <a href="https://assets.nationbuilder.com/nationalparty/pages/18466/attachments/original/1700778592/National_ACT_Agreement.pdf?1700778592" target="_blank">the ACT agreement</a>:</p><p>"Legislate to improve the quality of regulation, ensuring that regulatory decisions are based on principles of good law-making and economic efficiency, by passing the Regulatory Standards Act as soon as practicable" - applehood and mother pie, and who'd disagree. Whether it would extend as far as a rethink of say Part IV of the Commerce Act, where I've always felt there may be less heavy duty alternatives to our rate of return regulation, we'll have to wait and see. And while it might be implicitly tucked into that "economic efficiency" reference, I'd like to see an explicit criterion in any eventual Act that would require any proposed regulation to be assessed for its impact on competition and consumer choice.</p><p>"Establish a new government department, required to assess the quality of new and existing legislation and regulation, funded by disestablishing the Productivity Commission and consolidating some regulatory quality work across the public sector where appropriate" - the country has not gone into mourning over the demise of the Productivity Commission (though as the productivity challenge hasn't gone away I personally would like to see something resurrected along the solid lines of <a href="https://www.productivity.ac.uk/" target="_blank">the UK's Productivity Institute</a>), and if the money is used to fund better regulation, why not. </p><p>"In consultation with the relevant Minister, carry out regulation sector reviews, which could include the primary industries, the finance sector, early childhood education, and healthcare occupational licencing, in each case producing an omnibus bill for regulatory reform of laws affecting the sector" - a broad agenda which could encompass not just the benighted CCCFA (coming up next) but also ComCom's payments system regulation. Note too yet another welcome reference to tackling potentially overprotective professional qualification regimes.</p><p>"Rewrite the Credit Contracts and Consumer Finance Act 2003 to protect vulnerable consumers without unnecessarily limiting access to credit" (which also featured in the National Party's 100 point plan as number 48, "Cut financial red tape that is stifling investment, including significantly reducing the scope of the CCCFA which has restricted access to credit") - pretty much everyone accepts that successive tinkering with the CCCFA hasn't left us in a good place. Well-meaning attempts to protect the vulnerable ended up with lenders emptying people's waste baskets looking for receipts for Netflix subscriptions.</p><p>"Amend the Overseas Investment Act 2005 to limit ministerial decision making to national security concerns and make such decision making more timely" - completely reasonable. We already have one of the more restrictive overseas investment approval regimes by OECD standards, as shown in the graph below, and we need to lighten up if (among other things) we want another supermarket entrant or we want to attract some of the vast global pool of private equity money that's currently sloshing around looking for infrastructure opportunities (in particular for decarbonisation). We don't need any repeats of a Minister telling an overseas pension fund that they can't take a stake in a New Zealand airport. In the National Party's 100 point plan, they had as number 66 a very specific reason for liberalisation, "Amend the Overseas Investment Act and Income Tax Act to give investors certainty to invest in Build-to-Rent projects", which has since made it into the government's 100 day action plan, but hopefully the Overseas Investment Act will be freed up to benefit a wide variety of potential investors.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIYPU8dAtyq83kmi07QLP5VPuLYgiq8z-oSZ09Bn_TewU-eWG_IpeMFErvlS5Z_f7w8c5bjqTm-xnXewx0jCMuPuY7WUPZwecZ5U5Q4Nn1x1SzlnBG6fayjSIptzHlHzsutQVECKXXkEhWIMnBwBgg5Odyjm3ks_VgZKzxEouPxSwgoqIwD_A12oYcJJk/s2467/FDI%20measure%20again.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1787" data-original-width="2467" height="464" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIYPU8dAtyq83kmi07QLP5VPuLYgiq8z-oSZ09Bn_TewU-eWG_IpeMFErvlS5Z_f7w8c5bjqTm-xnXewx0jCMuPuY7WUPZwecZ5U5Q4Nn1x1SzlnBG6fayjSIptzHlHzsutQVECKXXkEhWIMnBwBgg5Odyjm3ks_VgZKzxEouPxSwgoqIwD_A12oYcJJk/w640-h464/FDI%20measure%20again.jpg" width="640" /></a></div><p>"Reform market studies introduced by the Commerce Amendment Act 2018 to focus on reducing regulatory barriers to new entrants to drive competition" - I can't say I like the look of this, for various reasons. For one thing, it's too early to be tinkering with a regime that's still new. More importantly, it looks as if it might be intended to limit the scope of future market studies solely to reducing regulatory barriers, which would be a mistake. There will be instances (such as the petrol stations) where the big competition issues are primarily ones of market power, not regulatory barriers, and the Commission shouldn't be barred from looking at them. It's arguable that the threshold test - "in the public interest" - for the Commission in s50 or the Minister in s51 to kick off a market study is too broad, but it's better than a threshold test that would be too narrow. On a more charitable reading, perhaps the "reform" will require the Commission to make sure that it uncovers all regulatory barriers in a study, but on the other hand they've been doing that quite well already (eg the thicket of resource consent, land planning and Overseas Investment Act hurdles to new supermarkets), so unfortunately the more uncharitable reading of an overrestrictive rollback looks the way to bet at the moment.</p><p>"Immediately issue stop-work notices on several workstreams, including Three Waters (with assets returned to council ownership)" - the 100 day action plan includes "Repeal Labour’s Three Waters legislation", so that's underway as a first step. What happens after that? National's 100 point plan had included (as number 68) "Restore council ownership and control of water assets, with strict rules for water quality and investment requirements" and (as number 69 in a welcome pinpointing of the current dynamic inefficiency debacle) "Introduce a requirement for water service delivery models to be financially sustainable, so that future generations don’t inherit outdated or failing infrastructure". Perhaps that can all be done under the remit of the current Water Services Economic Efficiency and Consumer Protection Act 2023, which installed ComCom as a sectoral regulator very much along the lines of its role as an electricity lines regulator (and which <a href="https://economicsnz.blogspot.com/2021/10/reinventing-wheel.html" target="_blank">I'd presciently argued here</a> was likely to be a better plan than Three Waters). Whether that will be timely enough - there's a rather leisurely timeframe in the Act for introducing regulation - or effective enough remains to be seen. ComCom can set investment paths, but with something like $150 billion worth of overdue maintenance to be paid for, it's still (however much you might like to stick it to councils for their previous pusillanimous water mismanagement) not obvious that they're in a financial position to pay for it.</p><p>Finally, there was a chance that a more business-friendly, deregulatory government might be minded to roll back some of the features of our existing competition regime. But nothing's been unwound, so that's something. On the other hand nothing's been advanced, either, even though the Commerce Act is now looking a bit shopworn. Understandably the negotiators had bigger things on their minds.</p><div>If I've missed anything, let me know and I'll happily update.</div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-68184565863006964762023-09-07T16:52:00.001+12:002023-09-09T13:58:14.153+12:00Here we go again<p>On August 23 the Aussie Treasurer Dr Jim Chalmers in a joint release with the Assistant Minister for Competition Dr Andrew Leigh <a href="https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/more-dynamic-and-competitive-economy" target="_blank">announced</a> a new competition review. It's meant to be a rolling rather than a one-off process - "<a href="https://treasury.gov.au/review/competition-policy-review-2023" target="_blank">A Competition Taskforce has been established in Treasury</a> to conduct the review, which will be progressed over two years and involve targeted public consultation. It will provide continuous advice rather than a formal report" - assisted by an expert advisory panel including luminaries like the CEO of the Grattan Institute <a href="https://grattan.edu.au/expert/danielle-wood/" target="_blank">Danielle Wood</a> and ex ACCC chair Rod Sims. Some initial topics have already been identified, including the ACCC's wish list for merger reform (which you can find <a href="https://www.accc.gov.au/about-us/media/speeches/the-role-of-the-accc-and-competition-in-a-transitioning-economy-address-to-the-national-press-club-2023" target="_blank">here</a>) and the prevalence of non-compete clauses in employment contracts.</p><p>I'd liked the pro-competition song Andrew Leigh has been singing when I heard him take to the mike at <a href="http://economicsnz.blogspot.com/2023/04/the-rbb-economics-conference-is-back.html" target="_blank">this year's RBB Economics conference</a>: "All good stuff", I'd said, but in a rare moment of prescience I'd added, "whether the rest of the Albanese government shares Andrew's vision of being "pro-growth progressives" remains to be seen".</p><p>It's still unclear. In July Aussie Transport Minister Catherine King decided not to allow Qatar Airways to operate more international flights. The competition review announcement had talked of building on "the Albanese Government’s existing efforts to boost competition" and tackling "cost of living pressures": King's decision, favouring a powerful and highly profitable incumbent, and helping maintain expensive air fares, didn't sit comfortably with either of those aspirations. In slight mitigation, the flight approval system King inherited is a rusty regulatory relic: governments should have been backed out of decision regimes like these years ago.</p><p>It didn't help that the ACCC hit the newly protected darling Qantas with a false, misleading or deceptive conduct lawsuit alleging that Qantas had advertised some 8,000 flights for sale that it knew it had already cancelled (press release <a href="https://www.accc.gov.au/media-release/accc-takes-court-action-alleging-qantas-advertised-flights-it-had-already-cancelled" target="_blank">here</a>, concise statement of claim <a href="https://www.accc.gov.au/system/files/ACCC%20v%20Qantas%20_%20Concise%20Statement%20-%2031%20August%202023.pdf" target="_blank">here</a>). The ACCC chair Gina Cass-Gottlieb is gunning for an all-time-record fine of the order of quarter of a billion big ones. It's only allegation at this stage, but the reputational damage has hit home: <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02707320-2A1471643?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank">as Qantas said</a> on September 4, "The ACCC’s allegations come at a time when Qantas’ reputation has already been hit hard on several fronts", and the Qantas CEO <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02707647-2A1471877?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank">decided to leave</a> two months early. The Aussie government wasn't to know what lay down the pike, but with hindsight I'd guess it is now wondering why it risked supporting an unpopular corporate against the interests of the flying public.</p><p>We shouldn't gloat too much on this side of the Tasman when Aussie policies don't line up in a neat row: pots and kettles, for starters, and in any event our interests are best served by having a prosperous well-functioning polity next door, so let's get back to the nuts and bolts of competition policy. </p><p>When I saw the announcement, I wondered why the Aussies were having yet another review - they seem to be on a regular 10-year cycle with the Hilmer review in 1993, the Dawson review in 2003, the Harper review in 2013, and now this one. My first reaction was that they risked a makework reinvention of the wheel - Harper seems like it was only yesterday - but on thinking a bit more about it, maybe they're right. A good example - it cropped up several times at <a href="http://economicsnz.blogspot.com/2023/08/clpinz-2023.html" target="_blank">this year's CLPINZ conference</a> - is what, if anything, needs to be addressed if collaborative ventures between otherwise competing businesses are needed to transition to decarbonisation, as they might well be. It's become a more urgent issue now than it was back in Harper's day, partly because in the interim, too little has been done, on both sides of the Tasman, to make enough progress towards our international global warming commitments.</p><p>The Aussie "let's have another rethink" approach contrasts with our more piecemeal approach to the Commerce Act. We haven't stood still: within the Act itself, off the top of my head I can think of the new prohibition against anti-competitive grocery covenants in s28A, the change to s36, the provisions in ss48 through 51E on market studies, and the introduction of the whole of the Part IV regulatory apparatus, and outside of the Act we've introduced rafts of ancillary competition-relevant legislation (most recently the Fuel Industry Act 2020, the Grocery Industry Competition Act 2023, and the Retail Payments Act 2022, on top of earlier dairy, electricity and telco legislation). Put that way, the case pretty much makes itself for a reasoned review in the round of where we've got to, how it all works together (or doesn't), and what remains to be done. </p><p>And if we're minded to have a high altitude rethink, I for one wouldn't be averse to a free ride on the Aussies' coattails if they improve their regime to meet the latest challenges. Yes, we're not them, and they're not us, but a lot of the problems are common. We could have saved ourselves several years of expensive navel-gazing if, day one, we'd simply pirated their post-Harper revision of their competition law to deal better to abuse of market power. If they come up with any more bright ideas in the next couple of years let's steal those, too.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-85293554005824738872023-08-31T11:44:00.000+12:002023-08-31T11:44:06.289+12:00Coordinating in the dark<p>While laid up at home with a very belated case of Covid - we're okay, thanks for asking - I thought I'd use the downtime to read <a href="https://www.imf.org/-/media/Files/Publications/CR/2023/English/1NZLEA2023001.ashx" target="_blank">the IMF's latest report</a> on New Zealand. I'm tempted to add the traditional "so you don't have to". While you don't expect an airport novel, even economists' eyes will glaze over when they find pieties like "The OCR [official cash rate] path should be calibrated to developments in the economy, including external shocks and fiscal and other policy responses". Well, <i>duh</i>.</p><p>Cheap shots aside, you can't argue with the big macro conclusion - we've overheated, and fiscal and monetary policy need to brake the economy: "With exemplary management of the pandemic, New Zealand recovered faster than most other advanced economies. This supported activity and, together with generous fiscal and monetary support, resulted in strong investment and consumption. But this came at the cost of overheating against capacity constraints exacerbated by restrictions on labor movement due to border closures, and disruptions in global supply chains". </p><p>You could argue that the RBNZ has done its bit, but that Treasury hasn't. As the graph below shows, we have a largeish positive (i.e. stimulatory) fiscal impulse in the current 2023-24 fiscal year, when if everything was nicely coordinated fiscal policy would also be tightening. Given the Auckland floods and Gabrielle I'm happy enough to cut some (but only some) slack in the circumstances and trust (hope?) that the fiscal largesse will unwind in coming years. It's also true, as Oscar Parkyn, New Zealand's alternate director at the IMF, points out in an accompanying statement, that "While the fiscal impulse is estimated to be positive in the current fiscal year, the authorities [i.e. the New Zealand government] note that near-term fiscal impulse forecasts are highly uncertain", and maybe there won't have been an unhelpful 1.8% of GDP boost to an already overstretched economy when the final beans are counted. All that said, some of the discretionary measures in the 2023 Budget, or other programmes that could have been put on the back burner, really ought to have been deferred till a more cyclically opportune time</p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEiVPR9RYKreCpjFT_dxDIS45ShhdpDfblosa_Ew7Un73Hh4yA-QEF04pKUmM0y3KNgcOksdfoGSWsM0CiL7gEpYqGGoYvPkSryp0xvR63Fxkmug22jyudscVFBUUKMd079Mug9BaTAMfSqLUTrvwSEwD71wi1WgF7_A3YhILQfCm7VzqdPzxqYTHfqdcBQ" style="margin-left: 1em; margin-right: 1em;"><img alt="" data-original-height="512" data-original-width="632" height="324" src="https://blogger.googleusercontent.com/img/a/AVvXsEiVPR9RYKreCpjFT_dxDIS45ShhdpDfblosa_Ew7Un73Hh4yA-QEF04pKUmM0y3KNgcOksdfoGSWsM0CiL7gEpYqGGoYvPkSryp0xvR63Fxkmug22jyudscVFBUUKMd079Mug9BaTAMfSqLUTrvwSEwD71wi1WgF7_A3YhILQfCm7VzqdPzxqYTHfqdcBQ=w400-h324" width="400" /></a></div><br />The Executive Board assessment in the report - "Directors underscored the importance of careful calibration of the fiscal and monetary policy mix to rebalance the economy and help address long-term structural needs" - is surely right. And I'm not convinced we have a good institutional mechanism to make that happen and to expose the consequences of fiscal and monetary policy not pulling together. If Joe and Joan Public had been told that you can have your Budget goodies, but your mortgage is now going to 6% rather than 5%, how impressed would they have been?<div><br /></div><div>Elsewhere in the report, the Executive Board said that "Compiling a monthly inflation index would enhance the effectiveness of monetary policy", and it crops up in various places: in the staff report (para 19), "During the consultation, the RBNZ flagged the need to improve data and real-time information to aid monetary policy decisions and highlighted the lack of monthly consumer price data as an important gap. The lack of a monthly CPI series makes New Zealand an outlier among advanced economies and is holding back a timelier formulation and assessment of monetary policy. A review of the financial resources of the RBNZ is ongoing" and (para 20, in the government's response), "Stats NZ is examining the possibility of publishing more price data on a monthly basis to enable more timely monitoring of inflation developments but noted that a monthly CPI series would require additional resources".</div><p>Sadly, we have form here. When Covid hit, we discovered we didn't have timely enough data on how the economy was tracking, and we started on a mad scramble in the middle of a crisis to develop some (<a href="http://economicsnz.blogspot.com/2020/04/getting-real.html" target="_blank">'Getting real'</a>, <a href="http://economicsnz.blogspot.com/2020/04/getting-even-more-real.html" target="_blank">'Getting even more real'</a>). Two years later along comes the worse outbreak of inflation in 30 years, and do we have the statistics to help us best cope with the latest challenge? No we don't. In our current and deeply strange ordering of statistical priorities, the Stats database can tell us what we spend monthly on imports of 'Preparations of vegetables, fruit, nuts or other parts of plants' from Bulgaria*, but it can't tell us our own country's monthly inflation rate.</p><p>Just over a year ago the Aussie Bureau of Statistics got with the plot and <a href="https://www.abs.gov.au/media-centre/media-releases/introducing-monthly-cpi-indicator#:~:text=Australian%20Bureau%20of%20Statistics%20(16,Website%2C%20accessed%2029%20August%202023." target="_blank">started its 'Monthly CPI indicator'</a>. We saw its value yesterday when the latest number (4.9% for July) came in below the expected 5.2% - useful new info all round, with reactions across numerous markets. Here? We're still twiddling our thumbs.</p><p><i>*$46,015 in May</i></p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-12318298343050760372023-08-23T15:20:00.001+12:002023-08-23T15:22:19.936+12:00CLPINZ 2023<p> After a rapid scramble to reorganise the schedule following the last minute loss of the planned keynote speaker, the 34th annual workshop of the Competition Law and Policy Institute of New Zealand (CLPINZ) successfully got underway in Wellington over the weekend.</p><p>Top of the bill - promoted at short notice from the previously planned 'fireside chat' session, and very much appreciated for their willingness to step up and help out - were Commerce Commission chair John Small, on 'The future of antitrust', and <a href="https://www.matthewslaw.co.nz/people/andy-matthews/" target="_blank">Andy Matthews</a> of Matthews Law as commentator. CLPINZ chair <a href="https://www.laneneave.co.nz/our-people/anna-ryan/" target="_blank">Anna Ryan</a> of Lane Neave chaired the session.</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjkL_VTeaWj7PvIqJ_60YmaMkH85b1BP5LPB2OsWKUnPv2m3tNFdBo1icQbOmNESU6bXEzZ0_KD-OXRzHgW-cdbcduetdyPqusYPGBBB2WXf__QKL0l-Oj8ThURAa1k0WrXBEcvHv-RubAnMAJvOZjcJx9wPBiQq9QYOPklgaGwKbbL5fEuavX7Q_r9Cw/s2952/john%20and%20andy.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="910" data-original-width="2952" height="198" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjkL_VTeaWj7PvIqJ_60YmaMkH85b1BP5LPB2OsWKUnPv2m3tNFdBo1icQbOmNESU6bXEzZ0_KD-OXRzHgW-cdbcduetdyPqusYPGBBB2WXf__QKL0l-Oj8ThURAa1k0WrXBEcvHv-RubAnMAJvOZjcJx9wPBiQq9QYOPklgaGwKbbL5fEuavX7Q_r9Cw/w640-h198/john%20and%20andy.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">John Small and his chosen topics; Andy Matthews commenting</td></tr></tbody></table><br /><div>John noted a swing in the intellectual competition policy pendulum, with a strong trend of more regulation <i>for </i>competition which had started twenty years ago with the Telco Act and has more recently extended to petrol, groceries and retail payment systems: on petrol, he noted that there were some retail "issues", a conclusion you'd tend to agree with after reading <a href="https://comcom.govt.nz/__data/assets/pdf_file/0023/316760/Quarterly-fuel-monitoring-report-Quarter-ending-30-December-2022.pdf" target="_blank">the latest quarterly petrol market monitoring report</a>. He signalled that there is likely to be more ComCom activity against restrictive practices, an area which he accepted had been underdone to date, with the likes of retail price maintenance, anti-competitive covenants, cartels - the leniency programme is still "ticking away" - and in the fulness of time the revised s36 provisions against abuse of market power likely to see more playtime. He said that the NZ merger guidelines were due for review in any event, and noted that they're also a hot issue in other jurisdictions (notably in the US and Australia). And he put some emphasis on how ComCom plans to engage with its various stakeholders: "efficiency-based playing nice", as he put it, preferably relying on soft power (such as guidelines) and on "direct, respectful engagement", and avoiding litigation if possible, but going there if ultimately necessary.</div><div><br /></div><div>Andy agreed that there had been a pronounced trend towards regulation for competition since around 2001 when there had been a "Big Bang" away from the previous reliance on light-handed, or no, regulation, and there could be a big payoff from the latest regulatory initiative, on consumer data rights, which could make competition in banking, for example, more effective. He also agreed with John's view that consumer law can be effectively used to complement competition policy, with for example significantly higher Fair Trading Act penalties over time providing a stronger incentive to be more consumer-friendly. And although the zeitgeist has moved to more hands-on interventionist competition policy, Andy reminded us that (a) the new and globally high-profile FTC/DoJ guidelines are just that, guidelines, and don't change the underlying law, and (b) regulation is all very well, but the first best option is always likely to be more effective competition, as we notably saw when a third mobile telco rolled out its gear.<br /><p>Session 2 was "The most environmentally friendly carbon neutral CLPINZ session ever! Or is it?". In other words, the currently controversial area of "greenwashing", making misleading claims about the greenness of a business's products, activities, positioning or performance. The speaker was <a href="https://www.linkedin.com/in/charlotte-turner-38118a4b/" target="_blank">Charlotte Turner</a>, senior associate, climate risk governance with MinterEllison in Melbourne, commentator was <a href="https://www.linkedin.com/in/kirsten-mannix-39506024/?originalSubdomain=nz" target="_blank">Kirsten Mannix</a>, acting general manager - fair trading at ComCom, chair <a href="https://www.russellmcveagh.com/our-people/bradley-aburn" target="_blank">Bradley Aburn</a> from Russell McVeagh. Charlotte referenced a web-scraping survey of the increased prevalence of green-focused claims, Kirsten referenced another which found an alarmingly high (~40%) proportion of potentially misleading claims. It's self-evidently an area with the potential to bite careless people: that said, as Charlotte said, the fundamentals haven't changed, and there are still well-established tests for 'deceptive' and 'misleading' even if the field they're being applied in is relatively new. And as Kirsten reminded us, one of the established principles is that 'intention' is not the point: <i>being </i>misleading will always put you on the wrong side of the law. You may well have read ComCom's own <a href="https://comcom.govt.nz/__data/assets/pdf_file/0017/220247/Environmental-claims-guidance-July-2020.pdf" target="_blank">'Environmental Claims Guidelines: a guide for traders'</a>, but might also like to follow up on some references Charlotte provided that originated with ASIC, the Aussie financial markets regulator: <a href="https://asic.gov.au/regulatory-resources/financial-services/how-to-avoid-greenwashing-when-offering-or-promoting-sustainability-related-products/" target="_blank">'How to avoid greenwashing when offering or promoting sustainability-related products'</a>, and <a href="https://download.asic.gov.au/media/ao0lz0id/rep763-published-10-may-2023.pdf" target="_blank">'REP 763 ASIC’s recent greenwashing interventions'</a>.</p><p>Session 3, 'Section 36: What can we learn from the Australian experience?', gave us incisive insights into how our s36, now amended to be in line with Australia's equivalent s46, will go in trying to deal to abuse of market power, given that our previous formulation of the law had proved ineffective. Chaired by <a href="https://www.minterellison.co.nz/people/jennifer-hambleton" target="_blank">Jennifer Hambleton</a>, it featured two very good speakers - <a href="https://www.gtlaw.com.au/people/simon-muys" target="_blank">Simon Muys</a> from Gilbert + Tobin in Melbourne and <a href="https://www.otago.ac.nz/law/staff/otago0241456.html" target="_blank">Ed Willis</a> from the University of Otago - and even though the 10 cases commenced under the new law in Australia have yet to go the full legal distance, and in some cases are still cantering towards the first fence, we got good ideas on what we might reasonably expect here. While some (including me) had hoped we might have got to a simpler place, compared to the counterfactual complexities of our old s36, both speakers agreed that litigating the new s36 will not be any simpler, just different (though, thankfully, more intellectually coherent). Establishing anti-competitive purpose, and establishing anti-competitive effect, will remain tricky, which is a bit of a disappointment to those of us who had hoped the Australian 'effects based test' would cut through more easily to the chase, and market definition looks to be at least as crucial as previously. </p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU3IO447oIDHSvKwNfY0AHlSkUoH4DV1CIcxKAvLquQpkC9kXekOEUcuEu5exrsr4UlfDPf_sMXEJPNuGrrpjQOXzhANq_oLTZLHB20pChobSbhNACDHtNuOlkKt-LuxEayz-Lrxn3Bkq1m8E_NH82Dzgv3Jgy7GNa3vohOEAXF15TK1cFWXqLwxXfZ-8/s1337/s36.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="685" data-original-width="1337" height="328" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiU3IO447oIDHSvKwNfY0AHlSkUoH4DV1CIcxKAvLquQpkC9kXekOEUcuEu5exrsr4UlfDPf_sMXEJPNuGrrpjQOXzhANq_oLTZLHB20pChobSbhNACDHtNuOlkKt-LuxEayz-Lrxn3Bkq1m8E_NH82Dzgv3Jgy7GNa3vohOEAXF15TK1cFWXqLwxXfZ-8/w640-h328/s36.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Simon Muys (L) and Ed Willis (R) reflect on the jurisprudence around abuse of market power</td></tr></tbody></table><p>Session 4 was 'The Next Gen' session, a new CLPINZ idea aimed at showcasing some of the talent coming through the younger ranks of the competition and regulation community, and was chaired by NERA's <a href="https://www.nera.com/experts/dr--william-s--taylor.html" target="_blank">Will Taylor</a>. Left to right below, we got <a href="https://www.linkedin.com/in/sophie-vinicombe-703732199/?originalSubdomain=nz" target="_blank">Sophie Vinicombe</a>, solicitor at Russell McVeagh, talking about Ticketmaster antitrust claims in the US (what looks in retrospect to have been a very poor merger clearance); <a href="https://chapmantripp.com/our-people/sophie-harker/" target="_blank">Sophie Harker</a>, senior solicitor at Chapman Tripp on collaborating with competitors in emergencies like Covid; <a href="https://www.linkedin.com/in/luke-archer-nz/?originalSubdomain=nz" target="_blank">Luke Archer</a>, principal investigator, Commerce Commission, on competition and sustainability; and <a href="https://www.linkedin.com/in/jono-henderson-4057bb11a/?originalSubdomain=nz" target="_blank">Jono Henderson</a>, consultant, NERA, on self-preferencing in digital markets (eg when a Google search throws up Google-associated products ahead of others'). All good topics, all well handled, and (going by people's reactions and the discussion at the CLPINZ AGM) I'd guess a 'Next Gen' session is going to be an ongoing feature of future workshops.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6UdpweQ8Hkr95HJi61l8OUDFGDP2tccAy_zdmgxebSk4WCmtGOMKsqoAphLEoxAqwDfHvsghnf479g3d2NBSOv2Xjq9x3A-gYKAlREl1MN8uxcqAeFwHHqiu9ZrZUdJnZ-1HUp4tXYPFfxjgIuddCdiweoNFmvl4cmykMFqfAcEP1ca6HRHFT6wBR144/s2095/next%20gen%20v2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="642" data-original-width="2095" height="195" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj6UdpweQ8Hkr95HJi61l8OUDFGDP2tccAy_zdmgxebSk4WCmtGOMKsqoAphLEoxAqwDfHvsghnf479g3d2NBSOv2Xjq9x3A-gYKAlREl1MN8uxcqAeFwHHqiu9ZrZUdJnZ-1HUp4tXYPFfxjgIuddCdiweoNFmvl4cmykMFqfAcEP1ca6HRHFT6wBR144/w640-h195/next%20gen%20v2.jpg" width="640" /></a></div><br /><div>Session 5, 'AI and Collusion: Unveiling the Challenges of Tomorrow', featured a bright idea by chair <a href="https://www.cliftonchambers.co.nz/2023/07/ben-hamlin/" target="_blank">Ben Hamlin</a>: have AI (in the form of ChatGPT) write both the blurb for the session and the biography of the speaker, <a href="https://www.stoutstreet.co.nz/dr-james-every-palmer-kc/" target="_blank">James Every-Palmer</a>, which ended up crediting James with everything short of the Nobel Prize in Economics (not to downplay his real achievements: let's hat-tip his involvement in <a href="https://www.lawyersforclimateaction.nz/news-events/ets-jr-win" target="_blank">the Lawyers for Climate Action NZ win in the High Court</a>, forcing the government to roll back its poor plan to paper the country with cheap emission trading scheme credits). James was surely right to argue that there is a long list of potentially anti-competitive concerns, not only over facilitated collusive conduct, such as tacit algorithmic price-formation, but also over unilateral conduct (including predatory conduct, and anti-competitive tying and bundling) and further issues across a variety of non-price dimensions including quality and privacy. Me, I'm a tech optimist, and inclined to believe the benefits of modern platforms in aggregate far outweigh their downsides, but you have to expect that some of the powerful incumbents will from time to time push their luck too far.</div><div><br /></div><div>And finally Session 6, 'Aotearoa New Zealand's Turning Point - Competition and Consumer Policy Implications', chaired by moi, featured <a href="https://www2.deloitte.com/nz/en/profiles/mayuresh-prasad.html" target="_blank">Mayuresh Prasad</a> from Deloitte Access Economics in Wellington. Mayuresh gets a big thank-you for stepping in at literally days' notice to fill the gap in the programme after John Small and Andy Matthews moved to the keynote slot. He showed us, first, some modelling of the costs and benefits of what we need to do to keep temperatures rising by no more than 1.5 degrees. In the graph below there's a period where we incur costs to put in place policies like carbon taxes and spend on new renewable energy (and hence our GDP on the green 'do something' track falls below our GDP on the orange 'do nothing' track). After a period - the 'turning point' of his title - we pull ahead of where we would have been otherwise, and Mayuresh put numbers on the initial costs and ultimate payoffs. The costs, for mine, looked a bit on the low side, but otherwise his modelling fits with other attempts along these lines which also show that we can indeed have our cake (a greener sustainable world) and eat it (have a higher standard of living). And secondly Mayuresh explored some of the competition and regulation policy implications, notably around facilitating the necessary collaboration for good stuff to happen, and in particular giving certainty early in the piece as to what is or is not permissible, as we don't have a lot of time to waste.</div><div><br /></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEiOBahw4fUbJYYxPomPEFYE-2e-XC3D3P8flsPiu_y6FaheOVbhTOuhqr61NvLPRHhyqpYglQIJp7QH7DecPclh0v2ZAEvg282OxyR0CcGsZv4GuXBZCptZqm-2AyIzHgCGikWd8DWS1cQJKxCunKen3uHU1RDIPmWHfLejpAsiORca0fm2S5VlVSeIo/s2607/climate.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1805" data-original-width="2607" height="445" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgEiOBahw4fUbJYYxPomPEFYE-2e-XC3D3P8flsPiu_y6FaheOVbhTOuhqr61NvLPRHhyqpYglQIJp7QH7DecPclh0v2ZAEvg282OxyR0CcGsZv4GuXBZCptZqm-2AyIzHgCGikWd8DWS1cQJKxCunKen3uHU1RDIPmWHfLejpAsiORca0fm2S5VlVSeIo/w640-h445/climate.jpg" width="640" /></a></div><br /><div><div class="separator" style="clear: both; text-align: center;"><br /></div><p></p><p><br /></p></div><div><br /></div></div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-86512195748898675412023-08-04T12:42:00.002+12:002023-08-05T08:15:24.300+12:00Don't forget the benefits<p>Scrutiny of mergers is on the increase, notably in the US, where <a href="https://www.ftc.gov/news-events/news/press-releases/2023/07/ftc-doj-seek-comment-draft-merger-guidelines" target="_blank">new draft merger guidelines</a> have been widely interpreted as a sign of a more activist competition regulator proposing to take a tougher line, but also elsewhere. In the UK, for example, one economist recently wrote a piece in the <i>Financial Times</i> pointing out that the CMA's merger decline rate has been rising in recent years (<a href="https://www.ft.com/content/b72bd1d8-8a92-47ec-b9fb-a4d415bcab03" target="_blank">'The UK’s competition watchdog risks undermining business dynamism'</a>, possibly $). </p><p>In this latest swing of the pendulum, it's getting harder to argue for the 'good' merger, where the merged entity produces efficiencies (typically cost savings) or other benefits, such as innovative synergies from a combo that's more than the sum of its parts, or creates a more effective competitor to an entrenched incumbent. And more critics are finding more reasons to ping supposedly 'bad' mergers which reduce competition and increase corporate market power.</p><p>By happenstance, along have come two pieces of work, reminding us not to forget the 'good merger' story.</p><p>First, two hat tips for unearthing the first piece. One goes to the always interesting 'Blog Watch' column which the University of Canterbury's Paul Walker (aka <a href="https://twitter.com/psw1937?s=20" target="_blank">GrumpyMcGrumpyface</a> on Twitter) writes for the New Zealand Association of Economists' <i>Asymmetric Information</i> newsletter (if you're the proverbial intelligent lay person who'd like some very well-written takes on local and international economic issues, sign up for <i>Asymmetric Information</i> <a href="https://nzae.substack.com/?utm_source=substack&utm_medium=email" target="_blank">here</a>, it's free). And the other goes to the equally approachable <a href="https://conversableeconomist.com/" target="_blank">Conversable Economist blog</a>, run by Timothy Taylor. He's also the editor of the <i>Journal of Economic Perspectives</i>, which "aims to bridge the gap between the general interest business and financial press and standard academic journals of economics" and is a terrific explainer in plain (or plainish) English of current economic debates (it's also free to read online, start <a href="https://www.aeaweb.org/journals/jep/issues" target="_blank">here</a>). Taylor's 'Recommendations for Further Reading' in each issue are always worth a look.</p><p>In his <a href="https://nzae.substack.com/p/blogwatch-july-2023-paul-walker?utm_source=substack&publication_id=829562&post_id=135350627&utm_medium=email&utm_content=share&triggerShare=true&isFreemail=false" target="_blank">latest (July) 'Blog Watch'</a>, Walker picked up on one of Taylor's blog posts in April, <a href="https://conversableeconomist.com/2023/04/12/after-that-big-merger-what-happened/" target="_blank">'After that Big Merger, What Happened?'</a>. Taylor had come across some research done by folks at the <a href="https://laweconcenter.org/" target="_blank">International Center for Law and Economics</a>, <a href="https://laweconcenter.org/resources/doomsday-mergers-a-retrospective-study-of-false-alarms/?doing_wp_cron=1691032027.0147750377655029296875" target="_blank">'Doomsday Mergers: A Retrospective Study of False Alarms'</a>. They looked back at six high profile, highly contested US mergers: their bottom line was that "Our retrospective analysis shows that many of the alarmist predictions of the past were completely untethered from prevailing market realities, as well as far removed from the outcomes that emerged after the mergers". With only one, partial, exception, the mergers had actually been 'good' mergers, with pro-competitive pro-consumer effects, or as Taylor summarised it, the retrospective case studies "do show pretty clearly that dire predictions about ill effects of mergers need to be taken with a few spoonfuls of salt" (he also wondered whether the merger sponsors' claimed benefits were as oversold as the merger critics' claimed costs were, which is fair enough).</p><p>The only partial exception was a big merger in the beer industry, where post-merger prices for some of the mass-market beers did increase (average prices remained steady). But that had the happy outcome that it created a profitable opening for the craft brewers, who have taken increased market share. And if you'd had the choice between a now more expensive but decidedly pedestrian beer and a tastily hopped artisan American Pale Ale, you'd have switched, too.</p><p>The other piece of research, which I came across on <a href="https://www.promarket.org/" target="_blank">the ProMarket blog</a>, is some work done for the World Bank. The ProMarket write-up is <a href="https://www.promarket.org/2023/07/31/firm-consolidations-hurt-workers-but-likely-not-because-of-market-power/" target="_blank">'Firm Consolidations Hurt Workers, But Likely Not Because of Market Power'</a>, and the original all the bells and whistles World Bank working paper is 'Firm Consolidation and Labor Market Outcomes', very short summary <a href="https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099346006082338228/idu0cc7ebe240e29c0427d0b2130bade568e40b9" target="_blank">here</a> and full pdf <a href="http://documents1.worldbank.org/curated/en/099346006082338228/pdf/IDU0cc7ebe240e29c0427d0b2130bade568e40b9.pdf" target="_blank">here</a>.</p><p>The researchers were primarily concerned about the adverse employment consequences of mergers, and they were well placed to investigate them. They were able to use a big administrative database in the Netherlands which contained matched employer-employee data, so they were able to compare what happened to employees in acquired companies after some 1,000 takeovers in the Netherland over 2011-15, compared to what happened at very similar companies that weren't taken over.</p><p>It's true that takeovers led to job losses: "There is substantial job loss among the workers of target firms: in the four years after a takeover, workers at a target firm are 8.5% less likely to be retained at the consolidated firm compared to workers in the control firm. This lower retention rate translates into income loss ... These effects are long-lasting and are present even in the fourth year after the takeover" (pp1-2 of the World Bank paper). </p><p>Now, the researchers are, properly, concerned about this long-term adverse impact on those hit by involuntary job loss: my two best answers (which I've championed here before) are, at a macroeconomic level, maintaining as hot a labour market as you can run without triggering inflation, and, at a microeconomic level, 'active' labour market policies that make it easy to retrain, upskill, or go self-employed. Stomping on anti-competitive constraints in the labour market, like non-compete clauses, wouldn't go amiss, either.</p><p>But that said, the employment restructurings they are bemoaning are what in the competition policy game we would call efficiencies: they're cost savings, and as the researchers discovered, cost savings of a very specific kind. They found that if lab technician Kath in the acquired company is paid more than lab tech Rita in the acquiring company, Kath tends to get laid off. They also found that if there are lots of accountants in the acquired company, but the acquiring company already has lots of accountants, too, then the acquired accountants tend to get laid off. </p><p>It makes complete sense, and it's likely to be a ubiquitous feature of mergers everywhere, not just in the Netherlands: if you were running the acquirer, you'd very likely act on similar lines. It's hard on Kath, and hard on the accountants, but the merged entity ends up more productive. And that's without thinking of any other efficiencies that may be on the table. Sure, for competition policy purposes, it's the net outcome that matters, and in any given case efficiencies may well be outweighed by detriments, but it would be silly to start from a viewpoint that efficiencies are nebulous or unlikely. A better starting presumption is that there are very likely to be at least some.</p><p>The Dutch example also got me thinking about what the New Zealand data might show. The Netherlands may well have a good administrative database, but so does New Zealand: indeed I'd hazard a guess that ours is top tier by international standards. Formally, it's the 'Integrated Data Infrastructure', or IDI: Stats <a href="https://www.stats.govt.nz/integrated-data/integrated-data-infrastructure/" target="_blank">calls it</a> "a large research database. It holds de-identified microdata about people and households. The data is about life events, like education, income, benefits, migration, justice, and health. It comes from government agencies, Stats NZ surveys, and non-government organisations (NGOs). The data is linked together, or integrated, to form the IDI. The IDI complements the Longitudinal Business Database (LBD), which holds linked microdata about businesses. The two databases are linked through tax data".</p><p>At one point, access to the IDI was overtightly corralled, and not enough was being done to exploit its potential value. Now, it's being increasingly mined to good purpose: this year's NZ Association of Economists' conference featured a variety of IDI-based projects. AUT's <a href="https://academics.aut.ac.nz/gail.pacheco" target="_blank">Gael Pacheco</a> and her team, for example, were able to follow (anonymised) Kiwi students who had done badly on the international PISA tests of numeracy and literacy to see what their subsequent employment, health, and justice system outcomes had been (as you'd expect, <a href="https://62397185-821a-4cdf-b4f7-8cc2999495c6.usrfiles.com/ugd/623971_96c392b1e7fc4130ae70fe6adffbf189.pdf" target="_blank">not good</a>).</p><p>So why hasn't someone had a look at the effects of takeovers? It's all very well for supporters of mergers to claim benefits, and critics to claim costs, and the Commerce Commission to appeal to first principles of economics, but wouldn't we get more informed decisions if the question was, how does this proposed merger line up with what we empirically know about New Zealand mergers in general?</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-65272801377547433022023-04-05T12:10:00.001+12:002023-04-06T20:08:03.358+12:00The RBB Economics conference is back<p>After the Covid-induced hiatus since <a href="http://economicsnz.blogspot.com/2019/11/rbb-economics-draws-crowd.html" target="_blank">its 2019 conference</a>, RBB Economics got back on track last week with its traditional face to face conference in Sydney. It was good to be able to schmooze again, and you never know who you'll meet: this time round I bumped into Lilla Csorgo, who's back in our part of the world as the about-to-be ACCC chief economist.</p><p>The first panel session was 'Reflections from the agency, judiciary, and private practice'. It featured the CEO of the ACCC, Scott Gregson (somewhat oddly, the ACCC doesn't list bios of its senior staff on its website but here's <a href="https://www.accc.gov.au/media-release/scott-gregson-appointed-accc-chief-operating-officer" target="_blank">the 2020 media release</a> about his appointment as COO, upgraded to CEO in February '22) on 'Pursuit of a strategic enforcement model – the ACCC’s journey'; King & Wood Mallesons partner <a href="https://www.kwm.com/au/en/people/peta-stevenson.html" target="_blank">Peta Stevenson</a> on 'Those who do not learn from the past are doomed to repeat it – is the ACCC doomed?<i>'; </i>and the Hon <a href="https://www.alrc.gov.au/about/commissioners/past-commissioners/the-hon-justice-john-eric-middleton-part-time-commissioner/" target="_blank">Justice John E Middleton</a> AM KC on 'A more demanding judiciary emerging?', all moderated by RBB Economics partner <a href="https://www.rbbecon.com/our-experts/george-siolis/">George Siolis</a>.</p><div>Scott took us through a history of the evolution of the ACCC from an essentially reactive complaints-driven collection of regional offices to an integrated national outfit with a more purposive agenda. Looking ahead, and he said these would be modest rather than massive moves, he expects that while a penalty-based regime will still be central, there's likely to be more focus on remediation and redress (good); that the ACCC will be driven more by market data and intelligence (as is everybody else these days); and that it will aim for better measurement of performance (always a tough job for anyone in the services game).</div><div><br /></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDNIV1QHAEBa65nccAU1KCsrZzdHvGnQjUocBW6N8MbUbe0y3nSTC99rC91RogNxbxnDdtQcVeUo-hPwd0QNemrGcsXKlRCpAygf4K7CNDC9HzV9MHWzwtDCg6x0qG5Kcr5KZIwUgPM15-NsQxJtNqiDTKcMvoL_qbrbCU2x_w6izoHBzU9nP75p5C/s2990/RBB%2023%20combined.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1482" data-original-width="2990" height="318" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiDNIV1QHAEBa65nccAU1KCsrZzdHvGnQjUocBW6N8MbUbe0y3nSTC99rC91RogNxbxnDdtQcVeUo-hPwd0QNemrGcsXKlRCpAygf4K7CNDC9HzV9MHWzwtDCg6x0qG5Kcr5KZIwUgPM15-NsQxJtNqiDTKcMvoL_qbrbCU2x_w6izoHBzU9nP75p5C/w640-h318/RBB%2023%20combined.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">(Left) George Siolis kicks things off; (right) the panel for the first session, Scott Gregson, Peta Stevenson, Hon Justice John Middleton</td></tr></tbody></table><br /><div>Peta walked back a bit from what she called her "click bait" title - no, the ACCC is not doomed - and focused on the performance-measurement element. Some purported measures based on levels of ACCC outputs or activities may well be problematic: higher numbers of cartel prosecutions, for example, could easily be a result of more cartels operating rather than less, and could well mislead people into thinking that the actual desired outcome (cartel deterrence) had been achieved. Better measures might be found by rerunning the likes of <a href="https://law.unimelb.edu.au/centres/clen/research/past-research-projects/cartel/research/project-news/project-survey" target="_blank">the University of Melbourne 2011 survey</a> of public awareness of cartels. And John explored some of the remediation and redress issues: the "demanding" bit of his address referred to judges demanding clearer and more convincing reasons why they should go along with agreed penalties, especially around whether they are appropriate to the degree of harm involved.</div><div><br /></div><div>The second session, 'Reflections on policy (1)', was a pre-taped address by <a href="https://www.aph.gov.au/Senators_and_Members/Parliamentarian?MPID=BU8" target="_blank">Dr Andrew Leigh</a>, Assistant Minister for Competition, Charities and Treasury (and incidentally a Harvard PhD and ex economics professor at ANU), on 'No Competition, No Progress'. He pointed to evidence of rising market concentration, higher company markups, declining job switching, and declining start-ups as a percentage of total firms (when you look at firms with employees, and not just ex-employees going out as one-man-band consultants, not that, ahem, there's anything wrong with that). He made a good case that effective competition policy can combat these productivity-sapping developments, and that the post- Hilmer-report competition reforms had been one of the reasons supporting an Australian productivity boom in the 1990s. All good stuff: whether the rest of the Albanese government shares Andrew's vision of being "pro-growth progressives" remains to be seen, but it's a good thing to aim for.</div><div><br /></div><div>Then came 'Reflections on policy (2)' on the broad theme of 'The shifting mandate of competition policy in Australia and globally'. We heard from Tom Leuner, Executive General Manager, Mergers, Exemptions and Digital at the ACCC (sorry, no web link or bio obviously available), White & Case partner <a href="https://www.whitecase.com/people/belinda-harvey" target="_blank">Belinda Harvey</a>, and Minter Ellison partner <a href="https://www.minterellison.com/people/katrina_groshinski" target="_blank">Katrina Groshinski</a>, moderated by RBB principal <a href="https://www.rbbecon.com/our-experts/chris-hart/" target="_blank">Chris Hart</a>.</div><div><br /></div><div>Tom (disclaimer - his views, not necessarily ACCC's) referenced the debate about whether merger enforcement globally had become too lax (he pointed to <a href="https://www.accc.gov.au/system/files/Joint%20statement%20-%20merger%20control%20enforcement.pdf" target="_blank">this joint report</a> from the CMA, the Bundeskartellamt and the ACCC). Looking forward he expected that merger policing would need to involve more focus on: non-price effects (such as on quality or privacy); effects on potential competition (the whole 'killer acquisition' thing); upstream markets facing downstream monopsonists; vertical mergers and potential foreclosure problems (very few challenged in the US recently, but more a live issue in Australia); and the process of dynamic competition, even if the analysis is necessarily qualitative. People tend to make a song and dance about how hard it is to judge whether some currently fringe start-up has the potential to be the Next Big Thing. My feeling (which I put to Tom) is that there are private equity and venture capital types who are 24/7 all over these start-ups and could well (given their skin in the game) have a pretty good sighting view of a start-up's eventual evolution. Don said that they do pick up on the valuations being paid for start-ups as an indicator of how big their idea is, which is fair enough, but I still wonder if there is some further information lurking unused.</div><div><br /></div><div>Belinda endorsed what Tom said, in particular picking up on the importance of protecting dynamic and potential competition, but she also wondered whether in a newfound tougher global merger approach, there weren't risks of 'big' being regarded as 'bad' irrespective of the efficiencies a merger might bring or of a big company's success in meeting customer needs. She also wondered how protecting nascent competitors from incumbent acquirers would play out: it could reduce the incentives for start-ups to form in the first place if their most likely cash-out, to one of the big guys, gets taken off the table.</div><div><br /></div><div>Katrina accepted that there is a global move of scepticism about big companies and where we've ended up - she instanced Bernie Sanders' book <i>It's OK to be Angry about Capitalism</i> - and that there's a view that ever bigger companies are a standing reproach to merger underenforcement. But she too wondered about going too adventurously down that road: big can be beautiful (the indirect reference was to E F Schumacher's <i><a href="https://en.wikipedia.org/wiki/Small_Is_Beautiful" target="_blank">Small is Beautiful</a></i>) if efficient. On a separate topic, she said that competition policy needs to be at the centre of Australian decarbonisation: it might yet get sidelined (e.g. to allow room for government acquisitions of energy assets), but the risk would be that you end up with an economically inefficient greening transition.</div><div><br /></div><div>And finally we came to 'Reflections on NSW Ports', a recent <a href="https://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FCAFC/2023/16.html" target="_blank">Full Federal Court decision</a>. Speakers were <a href="https://www.gtlaw.com.au/people/sarah-lynch" target="_blank">Sarah Lynch</a>, Special Counsel at Gilbert+Tobin, RBB principal <a href="https://www.rbbecon.com/our-experts/chris-whelan/" target="_blank">Chris Whelan</a>, and <a href="http://www.barristers.com.au/barristers/michael-borsky-kc/" target="_blank">Michael Borsky</a> KC, Ninian Stephen Chambers, List A Barristers. Sarah took us through the factual matrix of the case and Chris took us through some of the economic issues.</div><div><br /></div><div>The genesis of the case was interesting. I think it would be fair to say that the then chair of the ACCC, Rod Sims, had got so exasperated at Australian states maximising the value of their privatisations, by means of arrangements (in his view) providing anti-competitive protection for the assets being sold, that he'd had a gutsful (<a href="http://economicsnz.blogspot.com/2013/06/a-cunning-plan.html" target="_blank">an earlier example</a> had got on my wick, too). The ACCC duly took on provisions that it said protected the container depot monopoly of Ports of New South Wales: their privatisation had included a clause whereby Port of Newcastle, if it entered the container port game, would have to compensate the incumbent New South Wales ports (Port Botany and Port Kembla) for business lost to the upstart Newcastle challenger. The arrangement, the ACCC argued, acted as an anti-competitive barrier to Newcastle giving the container business a go.</div><div><br /></div><div>Unfortunately once the ACCC had clambered out of the trenches, it ran into the barbed wire of Crown immunity (the state of New South Wales could do what it liked, as its privatisation decisions were outside the purview of the Competition and Consumer Act, and the immunity also extended derivatively to Ports of NSW). While still tangled in the wire it was mortar bombed by failing to establish anti-competitive purpose (the court preferring the simple story of a financial purpose, namely an arrangement that the buyers would get the value of the monopoly they were paying good money for). And it got raked by the judges' machine gun fire on effect: they reckoned that the provisions made no difference, as it was very unlikely that Port of Newcastle would in fact get into the container trade. Chris had wondered, given the 50 year term of the lease the purchasers were buying, how confident you could be that Port of Newcastle would stay out of the game for such a long period: on the other hand, the state of New South Wales (likely for solid economic efficiency reasons) had made it clear that it was only interested in allowing sequential container port development, with Port Kembla second in the queue when Port Botany eventually reached capacity.</div><div><br /></div><div>The ACCC's reaction is <a href="https://www.accc.gov.au/media-release/full-federal-court-dismisses-accc-appeal-in-nsw-ports-case" target="_blank">here</a>. The good news is that despite the lengthy and expensive defeat, the ACCC's intervention probably helped to get to a better place: the compensation arrangement was eventually rescinded. The bad news, for mine, and accepting that the courts cleared Ports of New South Wales in this case, is that Crown immunity could leave too much scope for future anti-competitive rorts. Michael Borsky usefully reminded us that <a href="https://treasury.gov.au/sites/default/files/2019-03/Competition-policy-review-report_online.pdf" target="_blank">the Harper report</a> recommended that competition law ought to be extended to cover more of the activities of various levels of Australian government: at p282 it said that "Through its commercial transactions entered into with market participants, the Crown (whether in right of the Commonwealth or the States and Territories, including local government) has the potential to harm competition. The Panel considers that the NCP [National Competition Policy] reforms should be carried a step further and that the Crown should be subject to the competition laws insofar as it undertakes activity in trade or commerce". That looks a sensible view.</div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-17816026349816974392022-12-07T20:58:00.006+13:002023-02-09T10:03:46.616+13:00Stick it to them<p>Our Commerce Commission has just hosted the <a href="https://tcc.eventsair.com/icn-cartel-workshop-2022/programme" target="_blank">International Competition Network's annual cartel workshop</a>, on the nowadays typical hybrid online-plus-in-person basis, and it has been a fascinating meeting.</p><p>If you're not a competition policy tragic, sticking it to cartels may not ring your bell. You wouldn't be alone. People don't always appreciate the harm they do, and indeed it's not so long ago that cartels were seen as potentially a good idea. In FDR's depression-ravaged America, for example, cartels were actively encouraged: they were thought to be useful as a way of holding up prices when deflation was a macroeconomic problem. Some folks still think that cartels can help businesses through tough times by parceling out the available jobs so that everyone has some sort of income stream to help keep them going.</p><p>But these days, competition agencies, rightly, see cartels as an unmitigated evil. Cartels raise prices, ripping everyone off for illicit private commercial gain. They reduce output: think OPEC, which rorts the oil price by agreeing to curb production. And at least one of the four activities that fall under the general heading of 'cartel' - price fixing, market allocation, bid rigging, collective output control - is nothing short of outright commercial fraud. Crooked collusive bidding on tenders is a crime - and a particularly nasty one when it stitches up the likes of medical supplies or essential infrastructure - and the conspirators ought to face the prospect of being banged up with the other fraudsters, as they will when our cartel criminalisation regime goes live next April.</p><p>So there are good reasons why competition agencies everywhere want to discover and punish any existing cartels, and hence or otherwise deter new ones from forming.</p><p>Trouble is, one of their best weapons may be losing its oomph.</p><p>'Leniency', as it's known in the trade, was a Cunning Plan. It destabilised cartels by encouraging cartel members to rat on their mates. The first - and, importantly, only the first - cartelist to dob in the others got 'immunity': the Commerce Commissions of this world wouldn't take any proceedings against them, but would prosecute the rest of the gang. There is other stuff - the initial dobber-in had to continue cooperating with the investigation, for example - but that's the guts. </p><p>The importance of 'only the first' is right out of game theory. If a bit of mistrust starts to bubble up in a cartel - and let's face it, it tends to, as cartelists are always worried that someone will renege and sneak a commercial advantage by undercutting the high price they are supposed to quote - then the 'first in' element sets up a payoff matrix where the first in gets a positive payoff at the others' expense. And there have indeed been real world instances of cartelists racing to be first in the regulators' door. Overall, it's been good at unearthing cartels that mightn't have been found otherwise.</p><p>But there is a growing suspicion that cartelists may be opting to stay away from looking for leniency. It doesn't seem to apply to New Zealand - apparently the Commerce Commission has at least 17 leniency applications in, and at the conference we heard that Portugal's authority has eight, which the local folks think is a lot for an economy Portugal's size - but at least in some jurisdictions, notably the EU, the number of leniency applications has dropped off. </p><p>Why? Probably three things most of all. </p><p>One is that the EU has made it easier for private parties to swing in behind the competition regulator and sue for damages: the prospect of megabuck claims across multiple jurisdictions to recover the cartels' overcharging has made cartelists reconsider the leniency matrix of payoffs. Personally I'm all for facilitating people getting back their ill-lost costs, and multiple expensive court cases are exactly what the conspirators deserve (and should have thought of before they started), but realistically you've also got to wonder about the cost to competition enforcement of leniency becoming ineffective. </p><p>The second thing is that it's good to get immunity from a competition authority's <i>civil </i>proceedings and the risk of a big fine, but it's not always as clean a process as it might be for applicants to get immunity from <i>criminal </i>proceedings, where employees risk going to jail (as they have in Australia since 2009, and as they will here from next year). People really worry about that - you would, too - and if the deal doesn't come as a guaranteed combo, people won't buy it.</p><p>The third thing is that it's plausible that at least some competition authorities rested on their oars and let leniency do all the cartel detection work. Understandable: leniency was the gift that kept on giving. But, again, it upset the payoff matrix. Now, cartelists started to reckon that if they didn't dob a cartel in, there was sod-all chance that the competition authorities would find it by themselves. The calculus shifted to staying shtum. </p><p>How to turn the tables back in the competition authorities' favour?</p><p>You don't have to be a professional game theorist to get to the answer, which is to re-stack the payoff calculus.</p><p>One leg is to make the payoff from leniency and immunity more attractive. There's some swallowing of dead rats involved, but there you go. The main moving parts are ironclad civil <i>plus </i>criminal immunity, and probably some form of protection against private claims.</p><p>The other leg is to increase competition authorities' independent capability to find cartels. The Commerce Commission's Grant Chamberlain (below) chaired the plenary session on 'Widening the enforcement toolkit - how do we detect cartels going forward without relying on leniency?', and the big takeaway for me was that outreach programmes have a lot of cartel-detecting potential. Go out and about in the community on competition advocacy tours, and you'll find (as one panelist said) that if you talk to people, they tell you things. Funny, that.</p><div style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibRZoXgM36xVC91PyzY7PCfV_I_zAGrA9TysZCIGqoMUA6T9AOjq3XBVbVDRkuQMoVn98706uydhFXam9MEliUf9m_S4pUxoBEuE6LHS_3-ZecSwXNw0I4UeSJDxEkTJ1dwfTm4ttrRmjX_qrWbzYNKuSXqDZAp1nB6dHevbFKkGnusr2XvEvxC8oy/s2764/IMG20221206133338.jpg"><img border="0" data-original-height="1778" data-original-width="2764" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibRZoXgM36xVC91PyzY7PCfV_I_zAGrA9TysZCIGqoMUA6T9AOjq3XBVbVDRkuQMoVn98706uydhFXam9MEliUf9m_S4pUxoBEuE6LHS_3-ZecSwXNw0I4UeSJDxEkTJ1dwfTm4ttrRmjX_qrWbzYNKuSXqDZAp1nB6dHevbFKkGnusr2XvEvxC8oy/w640-h412/IMG20221206133338.jpg" width="640" /></a></div><p>Another very promising line of attack is Big Data. Everyone says Big Data will mean this, that or the other for society as a whole: not everyone has connected the dots and realised that in the right hands it could be a powerful anti-cartel tool. I was impressed by Spain's efforts. There is a nationwide Spanish e-platform used for public procurement tenders: their authority cloned it, and devised software to interrogate it for patterns suggestive of bid-rigging. Way to go. </p><p>And one last tool is encouraging whistleblowers, which has had some good results. Me, I'd stack the strategic deck a bit more, and as well as protecting whistleblowers from retaliation, I'd give them a share of the takings from any eventual fines. </p><p>Not that some need much extra motivation. One of the speakers told us of a French example, which involved bid-rigging contracts for upgrading school buildings. The cartelists had an IT guy set up the software to keep track of who got what. Later, almost incredibly, they made him redundant.</p><p>His wife dobbed them in.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-7608264399938800732022-09-29T14:17:00.005+13:002022-09-30T15:47:27.759+13:00CLPINZ 2022<p>Last weekend the 33rd annual <a href="https://www.clpinz.org.nz/" target="_blank">Competition Law and Policy Institute of New Zealand</a> (CLPINZ) workshop was held at Simpson Grierson's Auckland offices - many thanks to <a href="https://www.simpsongrierson.com/people/james-craig" target="_blank">James Craig</a> and the <a href="https://www.simpsongrierson.com/" target="_blank">Simpson Grierson</a> team for use of the impressive facilities. It was once again a hybrid event - effectively standing room only for the 80 or so attending in person, with others attending online - and it increasingly looks like the most effective and flexible way of putting on events like this. One of my mates reports that the digital version worked really well, so hat tip to Shannon Woodward and the team from <a href="https://conference.nz/" target="_blank">Conference Innovators</a> for organising everything and to their technical folk for making the linkups work.</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghS8gQ4xSyt45DIN98zoIRalff-hyfsWePkBfPk-t4WtZ5VX9EpXulfHh5ITIrwFKMjS3gFEDuhtZtCOpzbxdOLvt4W2uL38Z1IggRnn0y-yygC1b3xx1wdRXhpXsjdWLiXhzDjySz9daSVzApD6W0-Fiyaxt8nWgG1CWbYrk1GA7xKHYrBt9ZOVJh/s3771/IMG_20220924_092912.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="1647" data-original-width="3771" height="280" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEghS8gQ4xSyt45DIN98zoIRalff-hyfsWePkBfPk-t4WtZ5VX9EpXulfHh5ITIrwFKMjS3gFEDuhtZtCOpzbxdOLvt4W2uL38Z1IggRnn0y-yygC1b3xx1wdRXhpXsjdWLiXhzDjySz9daSVzApD6W0-Fiyaxt8nWgG1CWbYrk1GA7xKHYrBt9ZOVJh/w640-h280/IMG_20220924_092912.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">CLPINZ attendees hit the coffee, Saturday morning</td></tr></tbody></table><p>First up was the keynote speaker, <a href="https://som.yale.edu/faculty/fiona-m-scott-morton" target="_blank">Professor Fiona Scott Morton</a> from the Yale University School of Management: she was a fine presenter, and you could see why she's won teaching awards. Her general theme as per the workshop programme was 'Misuse of market power enforcement', and her presentation (online, from Edinburgh) was titled 'Competition Policy Whiplash'. Her argument was that over the past three or four decades economists, influenced by the 'Chicago School' style of thinking, had retreated more and more from activist anti-trust enforcement and towards deregulation and letting markets rip, whereas the economy, particularly the 'new' economy of tech and platforms, was posing more and more potentially anti-competitive problems. Old school economic thinking, and legal evidentiary standards in the US around an unrealistically high burden of proof, were being danced around by corporate strategies such as 'buy or bury' (acquisition or elimination of nascent competitors, what some call 'killer acquisitions'). Economics, and law, she reckoned, need a rev up to be able to better analyse what's going on (economics) and to be more able to do something about it in a courtroom (law).</p><p>Changing the law to better nobble anti-competitive stuff is precisely why we've recently reformulated s36 of our Commerce Act. <a href="https://hamlin.law/" target="_blank">Ben Hamlin</a>, the commentator on Fiona's paper, had a look at how we're set up to deal with the issues Fiona raised. On the plus side, our s36 looks a more flexible instrument than its US equivalent, partly because "likely effect" leaves room to catch anti-competitive effects that would fall short of the "more likely than not" test in an American court. And our High Court can (and typically does for these s36 cases) have a Lay Member, so there's a better chance that modern economics will get a look in (Ben told us something I didn't know, which was that both the Court of Appeal and the Supreme Court can appoint an economic adviser, which looks like a good option to have). On the down side, when we have tried to ping potentially anti-competitive stuff, it didn't work very well (albeit under the old s36 and before modern case management), and the Commission is going to have to lift both its investigation and prosecution game if it's going to be effective. And while the 'new' economy gets a lot of focus both overseas and at home (we've got some big tech companies of our own), Ben noted that the decarbonisation challenge posed by climate change is going to pose stiff competition challenges elsewhere, too (eg if a renewables-based electricity generator's market power got a tailwind).</p><p>Onwards to 'Setting the bar for collaborative activity workouts', presented by <a href="https://www.keene.co.nz/" target="_blank">Sarah Keene</a> and commented on by <a href="https://www.linkeconomics.com/team/emma-ihaia-lanigan" target="_blank">Emma Ihaia</a> of <a href="https://www.linkeconomics.com/" target="_blank">Link Economics</a>. The 'workout' theme referred to the gym involved in the Commerce Commission's decline of the first authorisation of a 'cartel' provision in a collaborative activity (press release <a href="https://comcom.govt.nz/news-and-media/media-releases/2022/commission-declines-clearance-for-anytime-nz-limiteds-collaborative-activity-clearance-application" target="_blank">here</a>, decision <a href="https://comcom.govt.nz/__data/assets/pdf_file/0027/285444/Anytime-NZ-Limited-Clearance-determination-27-May-2022.pdf" target="_blank">here</a>). Bit of a mouthful, but what's going on is that the Commission can authorise what would otherwise be a no-no - in this case, a gym franchisor setting maximum and minimum membership fees for its individual franchised gyms - if the provision is "reasonably necessary" for the collaboration to work. Several people pointed out that a lot of the evidence in this decision was redacted, and from the outside we're not privy to what the Commission saw, and even without knowing the details, the fact that the gym managed for some years without the provision it wanted authorised rather undercut the argument that it was "reasonably necessary" for the operation to be a commercial goer. That said, it looks distinctly odd that franchises have been caught by the law at all (people, including Sarah in a past life, had argued they shouldn't have been) - and I feel the same way, to my mind they are interconnected parties - and it's equally odd that even the Commission didn't see any anti-competitive harm ("In our Statement of Issues we expressed the preliminary view that competition is unlikely to be substantially lessened by the Proposed Agreement"). But that was moot: falling at the "reasonably necessary" hurdle meant it couldn't be cleared, even if it did no competitive harm. </p><p>Session 3 chaired by <a href="http://axiomeconomics.com.au/profiles" target="_blank">Hayden Green</a> of <a href="http://axiomeconomics.com.au/" target="_blank">Axiom Economics</a> was 'Insights into the Commission', originally meant to be a tour d'horizon by outgoing ComCom chair Anna Rawlings but sadly disrupted by a bereavement in her family. In her stead ComCom's Antonia Horrocks (GM Competition) and Andrew Riseley (GM Legal Service), stepped up at short notice and did very well indeed across a wide variety of topics (y'all know who they are but if not profiles are <a href="https://comcom.govt.nz/about-us/our-people/our-leadership-team" target="_blank">here</a>). Among the things I picked up on: the growth of the Commission (79 folks when the Commerce Act hit the statute books in 1986, 408 now), reflecting its expanded roles; it's setting up an outcomes-based framework to figure out its actual impact (or not), and is planning some look-back analysis of previous merger decisions (gets a tick in both those boxes from me); the value for money as a lighter-touch regulatory option of the $300K a year spent on the airports' information disclosure regime; how 'must do' things like the recent tsunami of mergers have sucked resources out of more discretionary stuff; and, something I'd been baffled about (<a href="http://economicsnz.blogspot.com/2021/03/what-if-they-threw-party.html" target="_blank">'What if they threw a party ...'</a>, <a href="http://economicsnz.blogspot.com/2021/09/sterny-mcsternface.html" target="_blank">'Sterny McSternface'</a>), what was going on with authorising collaborative activity to help with the response to Covid. As it happens, quietly in the background ComCom was in fact allowing helpful initiatives through, but barring a rather oblique reference (on p18 of the latest <a href="https://comcom.govt.nz/__data/assets/pdf_file/0033/277476/Commerce-Commission-Annual-Report-2021.pdf" target="_blank">Annual Report</a>), you'd be hard pressed to know. The Commission could usefully give itself a more public pat on the back.</p><p>Session 4, chaired by <a href="https://www.dlapiper.com/en/newzealand/people/m/murray-alicia/" target="_blank">Alicia Murray</a> of <a href="https://www.dlapiper.com/en/newzealand/" target="_blank">DLA Piper</a>, was on unfair terms in business to business (B2B) contracts, which kicked in here in New Zealand this August for B2B contracts where the trading relationship between the parties is less than $250K a year. Australia's had a regime going for small business contracts ('small' defined differently, but never mind) since 2016, so <a href="https://law.unimelb.edu.au/about/staff/jeannie-paterson" target="_blank">Professor Jeannie Paterson</a> of the University of Melbourne walked us through what's been happening there, with local commentary by <a href="https://www.minterellison.co.nz/people/jennifer-hambleton" target="_blank">Jennifer Hambleton</a> from <a href="https://www.minterellison.co.nz/" target="_blank">MinterEllisonRuddWatts</a>. The upshot from Australia is that while there is little case law (there have typically been settlements when the regulator has challenged terms), the likelihood that what is adjudged unfair in a B2B contract and what is unfair in a business to consumer contract may be different, and may reduce the likelihood that a term is unfair: Jeannie said for example that "Running a business is all about bargaining for a viable balance of risk and cost in the deal. Many businesspeople are savvy at this trade-off. They may not be able to influence the terms of a standard form contract, but they may negotiate price, which should reflect the risks assumed". That said, it wouldn't be safe to conclude that anything goes, and you can stick any old terms to anyone on a take it or leave it basis: "the takeaway lesson ... may be caution in the scope of the boilerplate provisions". Jennifer ran us through the technicalities of the NZ legislation, including pointing us to one of the limbs of the legal test for an "unfair" contract term, namely "The term is not reasonably necessary to protect the legitimate interests of the party advantaged", and noting that there is "significant uncertainty" about what that means. Given that (as we learned in a preceding session) "reasonably necessary" was also the big issue in collaborative activity authorisations, you'd wonder (as a non-lawyer, in any event) whether there couldn't have been a user-friendlier formulation in the law. In any event, the new legislation is one of those useful bits of consumer law where, by addressing imbalances of bargaining power, it helps grease the wheels of workably competitive markets.</p><p>Our dinner speaker was <a href="https://www.capitalnz.com/team/" target="_blank">Neale Jones</a> from government relations and communications firm <a href="https://www.capitalnz.com/" target="_blank">Capital</a>, who gave a very entertaining and insightful guide to effective political lobbying. I'd guess most of his audience have had a go somewhere along the way at influencing things in the competition and regulation space (I've weighed in on s36, market studies, ComCom's Covid-era powers, and ComCom's info sharing with other agencies) and we picked up some practical ways to do it better.</p><p>Saturday morning, and we started off with 'Market studies, looking back and looking forward'. It was to have been chaired by <a href="https://www.nera.com/experts/dr--william-s--taylor.html" target="_blank">Will Taylor</a> of <a href="https://www.nera.com/" target="_blank">NERA</a>, but at the last moment he came down with the dreaded lurgy, and the ubiquitous Ben Hamlin stepped in to preside over <a href="https://www.nzinitiative.org.nz/about-us/our-people/eric-crampton/" target="_blank">Eric Crampton</a> from <a href="https://www.nzinitiative.org.nz/" target="_blank">The New Zealand Initiative</a> and <a href="https://chapmantripp.com/our-people/lucy-cooper/" target="_blank">Lucy Cooper</a> from <a href="https://chapmantripp.com/" target="_blank">Chapman Tripp</a>. Two big points from Eric: if you're concerned that competition isn't working in a market, the best first question to ask is, what are the barriers to entry? Why aren't new entrants able to come into a market and eat the incumbents' supernormally tasty lunch? And secondly, when you do that, you're liable to discover that there are "impenetrable thickets" of overlapping blockages which are the real issue: he mentioned the cumulative effects, for example, of regulation (including occupational licensing), statutory protections, zoning and consenting in the planning process, and the Overseas Investment Act. Both Eric and Lucy wondered about the selection process: so far the topics chosen (while good ones) have all been government priorities, and there could well be traction from ComCom being given its head to look at where it thinks there may be issues. Lucy raised something I hadn't thought of: she said that ComCom's strength is in analysis and findings, and perhaps there's scope for the policy recommendation piece to be shared with, or done by, others, given that policy development is an art form of its own. I can see the point, and Lucy (who's been through the supermarkets and petrol bunfights) knows more about process than I do, but FWIW, what you might gain in policy development you might lose in urgency (think s36, and others), unless the policy developers' feet were held to the fire in the same way that ComCom is forced to move right along with its market studies.</p><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto;"><tbody><tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgX4RIu4IPc9kUtwT7FqHUueFnuhBMp7lgJt94GZpYW9l5u_p9nIk06U4kMsJeuokOnaKoJwpqPUIs7HI5DghRqkrXJp36erP8Lu71pIcDzgC4o1r9XWvbXyD2fP89S_EpV4ALN15y-uag1FsphpQlCtxC_wTdetBRQAD7gQSTlAnyt8OrvIWKuhwUg/s3556/IMG_20220924_093256.jpg" style="margin-left: auto; margin-right: auto;"><img border="0" data-original-height="2037" data-original-width="3556" height="366" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgX4RIu4IPc9kUtwT7FqHUueFnuhBMp7lgJt94GZpYW9l5u_p9nIk06U4kMsJeuokOnaKoJwpqPUIs7HI5DghRqkrXJp36erP8Lu71pIcDzgC4o1r9XWvbXyD2fP89S_EpV4ALN15y-uag1FsphpQlCtxC_wTdetBRQAD7gQSTlAnyt8OrvIWKuhwUg/w640-h366/IMG_20220924_093256.jpg" width="640" /></a></td></tr><tr><td class="tr-caption" style="text-align: center;">Ben Hamlin warms up the audience for Eric and Lucy</td></tr></tbody></table><p>And finally we got to an oddity of New Zealand's competition regime, ComCom's legislated inability to accept behavioural undertakings in merger proceedings. In the session, chaired by <a href="https://www.bellgully.com/our-people/glenn-shewan/" target="_blank">Glenn Shewan</a> from <a href="https://www.bellgully.com/" target="_blank">Bell Gully</a>, we heard from <a href="https://www.herbertsmithfreehills.com/our-people/linda-evans" target="_blank">Linda Evans</a> from <a href="https://www.herbertsmithfreehills.com/" target="_blank">Herbert Smith Freehills</a> in Sydney (Australia allows behavioural undertakings, and Linda's been involved in some big ones), with commentary from Michael Tilley, Geelong Cats fanatic and mergers manager at ComCom. Another very good session, and I hope I don't do it an injustice by cutting straight to the chase, namely that an absolute prohibition doesn't make much sense and that occasionally - occasionally - behavioural undertakings will be a good way to go. Linda: "The experience, particularly in the US, but also from Australia and Europe, indicates that behavioural undertakings may be appropriate in certain circumstances. In particular, well designed behavioural undertakings can effectively resolve any competition concerns, while also maintaining the efficiency benefits of a transaction". Michael: "There is a case for change; Acceptable standalone conduct remedies are likely to be rare; Claimed efficiencies should be treated with caution; Consumer benefits should outweigh the costs; Commission would want ability to say “no”". When we get the next update of the Commerce Act, this should be on the agenda.</p><p>If you'd like more detail on anything, the papers and slides are already up in <a href="https://www.clpinz.org.nz/members-area" target="_blank">the members' area</a> of the CLPINZ website, and recordings of the sessions will also be available in the near future.</p><p>A long post, but then this was a pretty chunky and meaty workshop. I'd guess the length was, um, reasonably necessary?</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-58991663211758451672022-07-07T14:05:00.000+12:002022-07-07T14:05:51.795+12:00A statistical surprise<p>The <a href="https://www.nzae.org.nz/" target="_blank">New Zealand Association of Economists</a> runs <a href="https://www.nzae.org.nz/prizes/nzier-poster-competition/" target="_blank">a poster competition</a> at each annual conference - a good idea, encouraging concision and clear messaging, not always a forte of economists - and this year it was deservedly won by Alexandra Turcu of AUT's <a href="https://workresearch.aut.ac.nz/" target="_blank">Work Research Institute</a>, with her entry, "Underutilisation in the New Zealand labour force: Unused human capital, or an underpaid workforce?". The winner's decided by popular vote of the attendees, and I voted for it, too.</p><p>Before reading it, and (I'd guess) like everyone else, I'd always assumed that the "underemployed" were available to work more hours than they currently are, and were a reserve slush fund of unused labour availability. But Alexandra discovered something striking about the apparently "underemployed". </p><p>She looked at the characteristics of two kinds of underemployed people - the full-time underemployed (full-time; available to work more; want to work more) and the part-time underemployed (part-time; ditto; ditto). Remarkably, she found that "Although the underemployed groups want to work more hours, and state that they are available to do so if more hours were available, our results reveal that they already work a similar amount to their fully utilised counterparts. The fully-utilised work only one hour more than the underemployed do per week": full-time employees, for example, who said they were "underemployed" were actually working 40 hours a week, virtually the same as the 41 hours of fully employed full timers, and it was the same story with part-timers where the "underemployed" ones were putting in 15 hours a week compared to the 16 put in by fully utilised part-timers.</p><p>So it is not at all obvious that these people actually form any substantial pool of increased labour supply - an important thing to know if, for example, you're the Reserve Bank wondering about potential output and full employment - and it's likely that what they're telling Stats has less to do with their availability to put in more hours and rather more to do with their relatively low incomes. As Alexandra put it, "This begs the question: Are underemployed workers truly underemployed, or are they just underpaid? When asked why they were underemployed, the majority of respondents said it was because there was not enough work available. However, it is important to note that the HLFS [household labour force survey] survey did not include "not enough income" as a potential answer".</p><p>So one practical lesson to take away is that there is less slack in the labour supply than you might have thought, if you had been relying on those apparently "underemployed" being available to step up to the plate and do more work. And if you were concerned about their low incomes, there's a positive to take away: fully 57% of those "underemployed" part timers transitioned into fully utilised full timers in the following quarter. They don't sit on the sidelines for long.</p><p>Here's the full poster.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0-YrnOJazZ0qt5-mZsFaYj7LSHEs1bboly5cgIXyvWUEDqY2dkNSpqkuyg0hUZf_Wyn-kz2CnzXi0oGo5NFXjV852sDV98hdeSu18dDgCe5EOFnJURAMjjTfDIBz5q0nCFCQC-_r1xja5jqJRliSPJvcPZP8AgttJyV0eWihY6OYFaT6G0MXjqQBV/s1945/NZAE%20winning%20poster%202022.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1945" data-original-width="1370" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj0-YrnOJazZ0qt5-mZsFaYj7LSHEs1bboly5cgIXyvWUEDqY2dkNSpqkuyg0hUZf_Wyn-kz2CnzXi0oGo5NFXjV852sDV98hdeSu18dDgCe5EOFnJURAMjjTfDIBz5q0nCFCQC-_r1xja5jqJRliSPJvcPZP8AgttJyV0eWihY6OYFaT6G0MXjqQBV/w450-h640/NZAE%20winning%20poster%202022.jpg" width="450" /></a></div><br /><p><br /></p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-60669964766772257442022-05-24T14:13:00.002+12:002022-05-26T14:21:29.610+12:00When there's a will ...<p>You don't often see competition reform feature in the Budget, but we did last week.</p><p>"We are ... committed to boosting competition in the New Zealand’s grocery sector to ensure people pay fair prices for food and other basics", Grant Robertson said in the Budget speech. "Today, we are introducing legislation that will remove barriers to new retailers entering the market. Specifically, this will prohibit the restrictive covenants on land that major grocery retailers use to limit site availability for competitors. Such covenants will be prohibited immediately once the Bill comes into effect, and I anticipate that competitors can begin to consider new sites shortly thereafter".</p><p>The Commerce (Grocery Sector Covenants) Amendment Bill is <a href="https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_123887/commerce-grocery-sector-covenants-amendment-bill" target="_blank">here</a>. It defines Foodstuffs North Island Limited, Foodstuffs South Island Limited, and Woolworths New Zealand Limited as 'designated grocery retailers', and creates a new s28A of the Commerce Act whereby "Certain grocery-related covenants are treated as prohibited and unenforceable" by deeming them as "having the purpose, or as having or being likely to have the effect, of substantially lessening competition in the relevant market", and so pinging them under the existing s27 and s28 of the Act. s27 we all know and love - contracts, arrangements and understandings substantially lessening competition - and s28 is its equivalent for anti-competitive covenants.</p><p>In its grocery market study (summary <a href="https://comcom.govt.nz/__data/assets/pdf_file/0023/278402/Market-study-into-the-retail-grocery-sector-Executive-summary-8-March-2022.pdf" target="_blank">here</a>, whole shebang <a href="https://comcom.govt.nz/__data/assets/pdf_file/0024/278403/Market-Study-into-the-retail-grocery-sector-Final-report-8-March-2022.pdf" target="_blank">here</a>), the Commerce Commission had identified "more than 90 restrictive covenants entered into by the major grocery retailers, the majority of which are still active" (6.77) and "over 100 exclusivity covenants in leases entered into by the major grocery retailers, the majority of which are still active" (6.80). Clearly, this isn't a small issue, and it may be rather bigger than the Commission thought. On its helpfully proactive <a href="https://www.foodstuffs.co.nz/market-study-reporting-dashboard" target="_blank">'Market study reporting dashboard'</a>, Foodstuffs North Island says that it alone has removed restrictive covenants from 78 out of 135 affected properties (the outstanding ones are on land it doesn't own any more, and they are approaching the current owners to bop those off, too).</p><p>So it's good news that the government has moved quickly to implement the Commission's recommendations 2A, 'Prohibit restrictive covenants that relate to the development of retail grocery stores' (discussed at 9.68 - 9.72) and 2B, 'Prohibit exclusive covenants in leases that relate to the operation of retail grocery stores' (9.73 - 9.79). Their impact may be overstated - my guess is that planning laws restricting the supply of land available for supermarkets may be more important, as may planners' inclination to protect competitors rather than to protect the competitive process (hence the Commission's 'Recommendation 1F: Retail grocery store development should not be able to be declined on the basis of adverse retail distribution effects on existing commercial centres') - and the supermarkets look to have been dismantling them anyway, but it's progress. </p><p>It's helpful that the political pressure to 'do something' about rising prices in the shops - a key focus of the Budget - helped bring about a quick competition policy response, and you'll excuse me if I snarkily add, 'for once', given the tortuous processes in getting s36 reformed, cartels criminalised, and indeed setting up the market study regime itself. When there's a will, there's a way, as they say. Moving this quickly, incidentally, means that you've only got a very brief window for submissions: Friday, in fact. The submission link is <a href="https://www.parliament.nz/en/pb/sc/make-a-submission/document/53SCED_SCF_BILL_123887/commerce-grocery-sector-covenants-amendment-bill" target="_blank">here</a>.</p><p>But I hope that the "it's the supermarkets wot done it" line about inflation doesn't get taken much further. In April the Commerce Minister, Dr David Clark, commented on the 7.6% rise in New Zealand food prices over the year to March, and <a href="https://www.beehive.govt.nz/release/annual-food-price-rise-confirms-need-rein-supermarkets%E2%80%99-super-profits" target="_blank">said</a> that "The March increase is above general inflation figures and highlights the role the grocery sector is playing in driving up prices. Rising food prices is a global issue. Omicron, ongoing disruptions to global supply chains and Russia’s invasion of Ukraine is putting pressure on prices in every country, but that is exacerbated here by the lack of competition at the checkout".</p><p>Hmmm. In the US, annual food price inflation was 8.8% in March; in Canada it was 9.7%; in the UK it was 6.7% in April. Overwhelmingly, inflation is not a matter of grocery industry structure, but a result of those other global factors that the Minister mentioned: he might have thrown in monetary policy, here and overseas, being left too stimulatory for too long after the initial Covid hit. Blaming the supermarkets, if only in part, for current food price inflation may play well to the galleries, but it's not a strong argument. If, as he said at the time, he had "not ruled out going further than the options that the Commission tabled in its final report", fair enough: quite a few folks (but <a href="http://economicsnz.blogspot.com/2022/03/aye-you-underwhelmed-im-not.html" target="_blank">not me</a>) reckon the Commission didn't go far enough. But I wouldn't take that step on the back of a not very convincing line of attack on inflation.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-18844913952287626952022-04-27T13:58:00.001+12:002022-04-27T14:04:21.639+12:00First guest post - Ben Hamlin on s47 penalties<p>I'm really pleased to announce the blog's first guest post - from Ben Hamlin, Barrister (<a href="mailto:Ben@hamlin.law" target="_blank">Ben@hamlin.law</a>). Our shiny new Commerce Amendment Act 2022 has got most attention for its (welcome) rewrite of s36 along Australian lines, but as Ben explains, there are other provisions which you need to be on top of. Ben's written about the increased penalties which will apply from May 5 to parties who breach s47 (anti-competitive mergers or acquisitions). As it happens, the Commerce Commission has been more active in recent years in opening s47 inquiries: Ben reviews the history and draws the lessons. Enjoy!</p><p style="text-align: center;">***</p><p class="MsoNormal" style="text-align: left;"><b>Increasing penalties for anti-competitive mergers<o:p></o:p></b></p>
<p class="MsoNormal">Merger activity is booming, so practitioners in that field might
be forgiven if they had overlooked the forthcoming increase in penalties for
mergers that contravene section 47 of the Commerce Act. <o:p></o:p></p>
<p class="MsoNormal">The increase is worth noting, but also provides an
opportunity to reflect on merger enforcement in recent years.<o:p></o:p></p>
<p class="MsoNormal"><b>The potential penalties for mergers are on the up<o:p></o:p></b></p>
<p class="MsoNormal">The first substantive provisions of the Commerce Amendment Act
2022 come into force on 5 May 2022, including an increase in the corporate financial
penalties associated with mergers that substantially lessen competition. From 5
May onward, the maximum penalty will be the greater of:<o:p></o:p></p>
<p class="MsoListParagraphCxSpFirst" style="margin-left: 72.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -36.0pt;"><!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">(i)<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->$10 million:<o:p></o:p></p>
<p class="MsoListParagraphCxSpLast" style="margin-left: 72.0pt; mso-add-space: auto; mso-list: l1 level1 lfo1; text-indent: -36.0pt;"><!--[if !supportLists]--><span style="mso-bidi-font-family: Calibri; mso-bidi-theme-font: minor-latin;"><span style="mso-list: Ignore;">(ii)<span style="font: 7.0pt "Times New Roman";">
</span></span></span><!--[endif]-->either,—<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">(A) if it can be readily
ascertained and if the court is satisfied that the contravention occurred in
the course of producing a commercial gain, 3 times the value of any commercial
gain resulting from the contravention; or<o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">(B) if the commercial gain cannot
readily be ascertained, 10% of the turnover of the person and all its
interconnected bodies corporate (if any) in each accounting period in which the
contravention occurred.<o:p></o:p></p>
<p class="MsoNormal">As is often the way, the change in merger penalties barely
rated a mention in the passage of the Commerce Amendment Act 2022. At the third
reading Hon Andrew Little, speaking in the place of Hon David Clark, noted:<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn1" name="_ednref1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[i]</span></span><!--[endif]--></span></span></a><o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">Another important way that the
Act protects the competitive process is through its prohibition against anti-competitive
mergers or acquisitions. For this prohibition to be effective, it needs to be
able to deter entities that may benefit significantly, in commercial terms,
from the merger. The bill ensures this can happen by increasing the monetary
penalty the courts can impose if entities are found to have contravened the
prohibition.<o:p></o:p></p>
<p class="MsoNormal">This change brings the penalty into line with contraventions
of Part 2 of the Act, and broadly into line with the penalties for a breach of
the equivalent provision in Australia.<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn2" name="_ednref2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[ii]</span></span><!--[endif]--></span></span></a> The increase from $5,000,000
to $10,000,000 is also broadly in line with inflation since the penalty was set
in 1990.<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn3" name="_ednref3" style="mso-endnote-id: edn3;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[iii]</span></span><!--[endif]--></span></span></a> <span style="mso-spacerun: yes;"> </span><o:p></o:p></p>
<p class="MsoNormal">So far, very orthodox: deterrence through ensuring that the
potential benefits are outweighed by the potential penalties. <o:p></o:p></p>
<p class="MsoNormal"><b>Does an increase in non-notified merger investigations
suggests inadequate deterrence?<o:p></o:p></b></p>
<p class="MsoNormal">An interesting further justification was provided in the
Cabinet paper approving the decision to increase the penalty. The Courts have
cautioned against placing much weight on cabinet papers when interpreting
legislation.<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn4" name="_ednref4" style="mso-endnote-id: edn4;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[iv]</span></span><!--[endif]--></span></span></a>
Any judges reading may wish to avert their eyes.<o:p></o:p></p>
<p class="MsoNormal">The paper noted that:<span class="MsoEndnoteReference"> <a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn5" name="_ednref5" style="mso-endnote-id: edn5;" title=""><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[v]</span></span><!--[endif]--></span></a></span><o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">“Since the beginning of 2018, the
Commerce Commission has undertaken investigations into eight possibly anti-competitive
mergers for which clearance or authorisation was not sought. This suggests that
the current penalties for anticompetitive mergers are not acting as a
sufficient deterrent.”<o:p></o:p></p>
<p class="MsoNormal">Does it? As the readers of this blog will be aware, the
penalty is only part of the optimal deterrence equation. The probability of
detection and prosecution is equally, if not more, important.<o:p></o:p></p>
<p class="MsoNormal"><b>The Commission’s merger enforcement 2010/11 to present<o:p></o:p></b></p>
<p class="MsoNormal">The Commission’s published <a href="https://comcom.govt.nz/about-us/strategic-planning-and-accountability-reporting/mergers-and-trade-practices-statistics">merger
statistics</a> show that there was indeed a real spike in s47 investigations.<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn6" name="_ednref6" style="mso-endnote-id: edn6;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[vi]</span></span><!--[endif]--></span></span></a> In the seven years between
2010/11 and 2016/17 there were a total of 11 section 47 investigations decided.
Yet in the two years 2017/2018 and 2018/2019 a further 11 section 47
investigations were decided. <o:p></o:p></p>
<table border="0" cellpadding="0" cellspacing="0" class="TableGrid" style="border-collapse: collapse; margin-left: -1.0pt; mso-padding-alt: 1.65pt 1.5pt 0cm .85pt; mso-yfti-tbllook: 1184; width: 589px;">
<tbody><tr style="height: 25.7pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td style="background: #B6AB86; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .55pt; margin-right: 0cm; margin-top: 0cm;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Financial
year</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.5pt;" width="38">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 1.85pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><span style="mso-spacerun: yes;"> </span>10/11</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.85pt;" width="38">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 1.85pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><span style="mso-spacerun: yes;"> </span>11/12</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 1.85pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><span style="mso-spacerun: yes;"> </span>12/13</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="3" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.8pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">13/14</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="3" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.8pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">14/15</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="3" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.25pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.8pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">15/16</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.8pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">16/17</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.8pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">17/18</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.8pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">18/19 </span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.95pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.8pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">19/20</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 2.85pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">20/21</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; text-align: center;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">21/22 HY</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: #B6AB86; border-left: none; border: solid #7F7F7F 1.0pt; height: 25.7pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: 1.2pt; margin-right: 0cm; margin-top: 0cm; text-align: justify;"><span style="color: white; font-size: 9.0pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Total</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
</tr>
<tr style="height: 12.6pt; mso-yfti-irow: 1;">
<td style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border-left: solid #7F7F7F 1.0pt; border-right: none; border-top: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="color: black; font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Clearances (s 66)</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 85.85pt;" valign="top" width="114">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 57.85pt;" valign="top" width="77">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 12.6pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-right-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 58.85pt;" valign="top" width="78">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
</tr>
<tr style="height: 19.3pt; mso-yfti-irow: 2;">
<td style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: solid #7F7F7F 1.0pt; border-right: solid windowtext 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="color: black; font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Total applications decided</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.5pt;" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">10</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.85pt;" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">10</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">8</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="3" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">12</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="3" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">14</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="3" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.25pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">12</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">7</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">9</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">11</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.95pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">9</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="2" style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">8</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">10</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="background: white; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="color: black; font-size: 10.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">120</span><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
</tr>
<tr style="height: 19.3pt; mso-yfti-irow: 3;">
<td style="border-top: none; border: solid #7F7F7F 1.0pt; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Unconditional clearance</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.5pt;" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">8<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.85pt;" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">8<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">6<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">9<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">11<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.25pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">9<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">3<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">5<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">8<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.95pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">9<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">6<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">6<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 19.3pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">88<o:p></o:p></span></p>
</td>
</tr>
<tr style="height: 20.9pt; mso-yfti-irow: 4;">
<td style="border-top: none; border: solid #7F7F7F 1.0pt; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Clearance with divestment</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.5pt;" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.85pt;" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.25pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.95pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 20.9pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">14<o:p></o:p></span></p>
</td>
</tr>
<tr style="height: 13.8pt; mso-yfti-irow: 5;">
<td style="border-top: none; border: solid #7F7F7F 1.0pt; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Declined</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.5pt;" valign="top" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.85pt;" valign="top" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.25pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">3<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.95pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">10<o:p></o:p></span></p>
</td>
</tr>
<tr style="height: 13.8pt; mso-yfti-irow: 6;">
<td style="border-top: none; border: solid #7F7F7F 1.0pt; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Withdrawn</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.5pt;" valign="top" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.85pt;" valign="top" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.25pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.95pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">3<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">8<o:p></o:p></span></p>
</td>
</tr>
<tr style="height: 13.8pt; mso-yfti-irow: 7;">
<td style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border-left: solid #7F7F7F 1.0pt; border-right: none; border-top: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="color: black; font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-color-alt: windowtext; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Section 47 investigations</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td colspan="5" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 86.75pt;" valign="top" width="116">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="3" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 57.85pt;" valign="top" width="77">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
<td colspan="2" style="background: #D7D3C3; border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-bottom-alt: solid #7F7F7F .5pt; mso-border-right-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 57.95pt;" valign="top" width="77">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 8.0pt;"><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p> </o:p></span></p>
</td>
</tr>
<tr style="height: 13.8pt; mso-yfti-irow: 8; mso-yfti-lastrow: yes;">
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: solid #7F7F7F 1.0pt; border-right: solid windowtext 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 65.6pt;" valign="top" width="87">
<p class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .3pt; margin-right: 0cm; margin-top: 0cm;"><span style="font-size: 7.5pt; mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">Number decided</span><span style="mso-bidi-font-size: 11.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;"><o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.5pt;" valign="top" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.85pt;" valign="top" width="38">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">3<o:p></o:p></span></p>
</td>
<td colspan="2" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 29.05pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td colspan="3" style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
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<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
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<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
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<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
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<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">7<o:p></o:p></span></p>
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<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">4<o:p></o:p></span></p>
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<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .8pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">1<o:p></o:p></span></p>
</td>
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<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">2<o:p></o:p></span></p>
</td>
<td style="border-bottom: solid #7F7F7F 1.0pt; border-left: none; border-right: solid #7F7F7F 1.0pt; border-top: none; height: 13.8pt; mso-border-alt: solid #7F7F7F .5pt; mso-border-left-alt: solid #7F7F7F .5pt; mso-border-top-alt: solid #7F7F7F .5pt; padding: 1.65pt 1.5pt 0cm .85pt; width: 28.9pt;" valign="top" width="39">
<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">0<o:p></o:p></span></p>
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<p align="center" class="MsoNormal" style="line-height: normal; margin-bottom: 0cm; margin-left: .85pt; margin-right: 0cm; margin-top: 0cm; text-align: center;"><span style="font-size: 10.0pt; mso-bidi-language: AR-SA; mso-fareast-font-family: DengXian; mso-fareast-language: EN-NZ; mso-fareast-theme-font: minor-fareast;">25<o:p></o:p></span></p>
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<p class="MsoCaption">Table <!--[if supportFields]><span style='mso-element:field-begin'></span><span
style='mso-spacerun:yes'> </span>SEQ Table \* ARABIC <span style='mso-element:
field-separator'></span><![endif]--><span style="mso-no-proof: yes;">1</span><!--[if supportFields]><span
style='mso-no-proof:yes'><span style='mso-element:field-end'></span></span><![endif]-->
Source: Commerce Commission Merger Determination and Enforcement Statistics -
December 2021<o:p></o:p></p>
<p class="MsoNormal">What could have caused the jump? It is difficult to
distinguish correlation and causation. But many competition law tragics will
remember a heady period where the Commission blocked five transactions in 13
months: Sky/Vodafone February in 2017, Aon/FPIS in March 2017, the NZME/Fairfax
Authorisation was declined in May 2017, Vero/Tower in July 2017, and Trade Me/Limelight
in March 2018. Appeals were filed against three of the decisions (Sky/Vodafone,
NZME/Fairfax, Vero/Tower), but two were withdrawn and the NZME/Fairfax appeal proceeded
unsuccessfully.<o:p></o:p></p>
<p class="MsoNormal">It is possible that blocking a number of high profile
mergers in quick succession caused some parties to avoid clearance. In any
event, the increase in section 47 investigations did not escape the Commission’s
attention. In August 2018, the Commission announced its priorities for
2018/2019, and ‘non-notified mergers’ was among them. The Commission’s then
Chair was quoted as saying:<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn7" name="_ednref7" style="mso-endnote-id: edn7;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[vii]</span></span><!--[endif]--></span></span></a><o:p></o:p></p>
<p class="MsoNormal" style="margin-left: 36.0pt;">“New Zealand is one of a few
jurisdictions with a voluntary merger clearance regime and the Commission is
seeing an increase in non-notified mergers. Over the past 2 years we have
opened five investigations into non-notified mergers. The success of a
voluntary regime relies on the credible threat of enforcement proceedings so we
will act quickly in these cases to prevent adverse impacts on competition in
markets.”<o:p></o:p></p>
<p class="MsoNormal">Opening investigations is, of course, the easiest part of
the process, and does not mean any competition issue exists. Competition
investigations can start, stop, or spend a long time in between, and are often
a black box to the outside world. Up until July 2017, little information
appears to have been published unless a section 47 investigation resulted in
litigation.<o:p></o:p></p>
<p class="MsoNormal">Fortunately, in July 2017, the Commission had announced that
it intended publish a record of section 47 investigations on its website, to
ensure the public and market were aware of investigations into potentially
anti-competitive transactions.<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn8" name="_ednref8" style="mso-endnote-id: edn8;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[viii]</span></span><!--[endif]--></span></span></a> As a result, the
Commission’s case register records outcomes for 11 section 47 investigations
since the beginning of 2018. <o:p></o:p></p>
<p class="MsoNormal">A breakdown of them is instructive:</p><p class="MsoNormal"></p><ul style="text-align: left;"><li><span style="text-align: justify;">In three
cases, the Commission considered there was either no issue, or insufficient
evidence to establish a competition issue: </span><a href="https://comcom.govt.nz/case-register/case-register-entries/bondor-new-zealand-limited2/media-releases/commission-closes-investigation-into-bondors-acquisition-of-the-long-group" style="text-align: justify;">Bondor
NZ/The Long Group</a><span style="text-align: justify;">, </span><a href="https://comcom.govt.nz/case-register/case-register-entries/beijer-ref-ab-heatcraft-new-zealand-limited-and-kirby-nz-limited" style="text-align: justify;">Bejier
Ref AB/Heatcraft NZ/Kirby NZ</a><span style="text-align: justify;">, and </span><a href="https://comcom.govt.nz/case-register/case-register-entries/glenninburg-holdings-limited-wallace-group-gp-limited" style="text-align: justify;">Glenninburg
Holdings/Wallace Group GP</a><span style="text-align: justify;">.</span></li><li><span style="text-align: justify;">In four cases,
the Commission closed its investigation following a divestment or change in
transaction. In </span><a href="https://comcom.govt.nz/case-register/case-register-entries/vero-insurance-new-zealand-limited-tower-limited" style="text-align: justify;">Vero
Insurance NZ/Tower Insurance</a><span style="text-align: justify;">, no further action was taken after Vero
divested the 19.9% of Tower it had bought during its attempted takeover of
Tower. In </span><a href="https://comcom.govt.nz/case-register/case-register-entries/fulton-hogan" style="text-align: justify;">Fulton
Hogan/Stevenson</a><span style="text-align: justify;">, no further action was taken after Fulton Hogan agreed not
to acquire Stevenson’s Huntly quarry. In </span><a href="https://comcom.govt.nz/case-register/case-register-entries/david-ferrier-cavalier-wool-holdings" style="text-align: justify;">David
Ferrier/Cavalier Wool Holdings</a><span style="text-align: justify;"> no further action was taken after David
Ferrier sold down his interest NZ Wool Dumping. In </span><a href="https://comcom.govt.nz/case-register/case-register-entries/datix-rl-solutions" style="text-align: justify;">Datix/RL
Solutions</a><span style="text-align: justify;">, no further action after Datix divested several customer
contracts.</span></li><li>In four cases,
the Commission commenced proceedings. In <a href="https://comcom.govt.nz/case-register/case-register-entries/platinum-equity-llc-officemax-holdings-limited/media-releases/platinum-to-divest-winc-nz-to-address-competition-concerns-in-office-products-market">Platinum
Equity/OfficeMax Holdings</a>, a settlement was reached after litigation was
commenced. Platinum purchased OfficeMax but divested its WINC NZ business. In <a href="https://comcom.govt.nz/case-register/case-register-entries/wilson-parking-new-zealand-limited-penrith-holdings-limited">Wilson
Parking NZ/Penrith Holdings</a>, a settlement was reached after litigation was
commenced. Wilson Parking offered an enforceable undertaking to divest the assets
it had acquired. In <a href="https://comcom.govt.nz/case-register/case-register-entries/first-gas-limited-gasnet-limited">First
Gas/Gas Net</a>, an agreed civil pecuniary penalty was imposed. And most
recently, in <a href="https://comcom.govt.nz/case-register/case-register-entries/objective-corporation-limited-and-master-business-systems-limited">Objective
Corporation/Master Business Systems</a>, a civil pecuniary penalty is to be
imposed following settlement.</li></ul><p></p><p class="MsoNormal" style="margin-left: 18.0pt; text-align: justify;"><o:p></o:p></p><p class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo2; text-indent: -18.0pt;"><!--[if !supportLists]--><o:p></o:p></p><p class="MsoNormal" style="margin-left: 18pt; text-align: justify;"><o:p></o:p></p>
<p class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo2; text-indent: -18.0pt;"><o:p></o:p></p>
<p class="MsoNormal">Without going into the merits of any of these individual
cases, the outcomes overall suggest that the Commission was right to have some concerns
but appears to have been able to address them. While headlines tend to focus on
declines and penalty cases, divestures can equally represent a significant
outcome for competition. In some cases, such as Platinum Equity/OfficeMax
litigation, or the recent Ampol/Z Energy clearance, the entire existing New
Zealand business is divested. It is also clear that some deals are ultimately
stopped because of competition concerns, which can see investigations halted or
clearance applications withdrawn.<a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_edn9" name="_ednref9" style="mso-endnote-id: edn9;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 11.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 14.0pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[ix]</span></span><!--[endif]--></span></span></a><o:p></o:p></p>
<p class="MsoNormal">This burst of section 47 activity may not be permanent. The Commission’s
register indicates that while three section 47 investigations were commenced in
mid-2020, there have been none commenced since August 2020 despite a veritable
boom in merger activity. Instead, the 2021/2022 year appears to be one for the
books in terms of merger clearances, with 15 applications decided in the first
three quarters. <o:p></o:p></p>
<p class="MsoNormal">One possible explanation for this is that the Commission’s
announced focus on non-notified mergers, followed up with investigations, has
resulted in the pendulum swinging back towards parties seeking clearance. The increased
probability of detection may have been what was missing, rather than the size
of the penalties.<o:p></o:p></p>
<p class="MsoNormal"><b>Conclusions<o:p></o:p></b></p>
<p class="MsoNormal">One busy year is not enough to draw firm conclusions, and we
are working with small numbers in any event. But I would suggest three
conclusions can be drawn, for what they are worth, from the data we have.<o:p></o:p></p>
<p class="MsoNormal">First, the Commission’s decision to regularly publish data
on its merger work, and the decision to make section 47 information public on
its register, assists in analysis and understanding of the Commission’s work in
context. 10 years ago, a practitioner would need to rely on insider knowledge, intuition,
or a lengthy series of OIA requests, to attempt to understand what was going
on. <o:p></o:p></p>
<p class="MsoNormal">Second, the Minister was right that there was an increase in
section 47 investigations, but it does not necessarily follow that a penalty
increase was needed for that reason alone. If in the future there is a decrease
in voluntary notifications, perhaps because of the cluster of blocked
transactions, then the appropriate response might be more investigation. That may
require resourcing and appropriate enforcement tools, rather than another
increase in penalties. <o:p></o:p></p>
<p class="MsoNormal">Third, the Commission’s performance should be assessed in
context. The Commission has not declined a clearance since Trade Me/Limelight,
more than four years ago. But that does not mean that the Commission has not been
busy enforcing New Zealand’s merger laws in other ways. Anyone viewing New
Zealand as a soft touch could be in for a surprise.<o:p></o:p></p>
<p class="MsoNormal">And from 5 May, it is potentially a much larger one.<o:p></o:p></p>
<p class="MsoNormal">Ben Hamlin, Barrister.<o:p></o:p></p>
<p class="MsoNormal"><i>Disclosure: Ben Hamlin was Deputy General Counsel,
Competition, later Chief Legal Adviser, Competition, at the Commerce Commission
between February 2017 and March 2022. His views are his own.<o:p></o:p></i></p>
<div style="mso-element: endnote-list;"><!--[if !supportEndnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="edn1" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref1" name="_edn1" style="mso-endnote-id: edn1;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[i]</span></span><!--[endif]--></span></span></a>
Commerce Amendment Bill, Third Reading, 17 March 2022.<o:p></o:p></p>
</div>
<div id="edn2" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref2" name="_edn2" style="mso-endnote-id: edn2;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[ii]</span></span><!--[endif]--></span></span></a>
See section 76 of the Competition and Consumer Act 2010 (Cth).<o:p></o:p></p>
</div>
<div id="edn3" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref3" name="_edn3" style="mso-endnote-id: edn3;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[iii]</span></span><!--[endif]--></span></span></a><span style="mso-spacerun: yes;"> </span>The RBNZ Inflation Calculator indicates that
a basket of goods worth $5 in Q2 1990, when the Commerce Amendment Act 1990 was
passed, would be worth $9.60 in Q4 2021, the most recent available data.<o:p></o:p></p>
</div>
<div id="edn4" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref4" name="_edn4" style="mso-endnote-id: edn4;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[iv]</span></span><!--[endif]--></span></span></a>
See for example, <i>A Labour Inspector v Southern Taxis Ltd</i> [2021] NZCA 705
at [51].<o:p></o:p></p>
</div>
<div id="edn5" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref5" name="_edn5" style="mso-endnote-id: edn5;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[v]</span></span><!--[endif]--></span></span></a>
<span style="mso-spacerun: yes;"> </span>Cabinet Paper “Review of Section 36 of
the Commerce Act and Other Matters: Policy Decisions” (18 February 2020) at
[56], available online <a href="https://www.mbie.govt.nz/dmsdocument/11263-review-of-section-36-of-the-commerce-act-and-other-matters-policy-decisions-proactiverelease-pdf">here</a>.<o:p></o:p></p>
</div>
<div id="edn6" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref6" name="_edn6" style="mso-endnote-id: edn6;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[vi]</span></span><!--[endif]--></span></span></a>
Merger determinations and enforcement statistics – December 2021, available <a href="https://comcom.govt.nz/about-us/strategic-planning-and-accountability-reporting/mergers-and-trade-practices-statistics">here</a>.<o:p></o:p></p>
</div>
<div id="edn7" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref7" name="_edn7" style="mso-endnote-id: edn7;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[vii]</span></span><!--[endif]--></span></span></a>
Commerce Commission “Commission releases 2018/19 priorities” (press release, 9
August 2018) available online <a href="https://comcom.govt.nz/news-and-media/media-releases/2018/commission-releases-201819-priorities">here</a>.<o:p></o:p></p>
</div>
<div id="edn8" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref8" name="_edn8" style="mso-endnote-id: edn8;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[viii]</span></span><!--[endif]--></span></span></a>
Dr Mark Berry, “Opening remarks” (Competition Matters 2017, Wellington, 21 July
2017).<o:p></o:p></p>
</div>
<div id="edn9" style="mso-element: endnote;">
<p class="MsoEndnoteText"><a href="file:///C:/Users/econo/Downloads/Draft%20Merger%20Article.docx#_ednref9" name="_edn9" style="mso-endnote-id: edn9;" title=""><span class="MsoEndnoteReference"><span style="mso-special-character: footnote;"><!--[if !supportFootnotes]--><span class="MsoEndnoteReference"><span style="font-family: "Calibri",sans-serif; font-size: 10.0pt; line-height: 107%; mso-ansi-language: EN-NZ; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Cordia New"; mso-bidi-font-size: 12.5pt; mso-bidi-language: TH; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[ix]</span></span><!--[endif]--></span></span></a>
For example, the recent Cargotec/Konecranes and Aon/Willis Towers Watson
mergers were both cancelled because of competition concerns.<o:p></o:p></p>
</div>
</div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-39865089794028628372022-03-22T16:14:00.003+13:002022-03-22T21:24:17.684+13:00Are you underwhelmed? I'm not<p>It would be fair to say that the Commerce Commission's <a href="https://comcom.govt.nz/__data/assets/pdf_file/0024/278403/Market-Study-into-the-retail-grocery-sector-Final-report-8-March-2022.pdf" target="_blank">recent market study</a> into the supermarkets left the commentariat distinctly underwhelmed: Bryce Edwards' Political Roundup had a <a href="https://democracyproject.nz/2022/03/09/bryce-edwards-political-roundup-supermarkets-win-in-the-end/?msclkid=b3346d5da97811ecaf467f88a3a816b4" target="_blank">useful summary</a> of the immediate reactions and its title - 'Supermarkets win in the end' - captured the general drift (there are some follow-up reactions in his next few days' Roundups, <a href="https://democracyproject.nz/2022/03/10/bryce-edwards-political-roundup-can-three-waters-be-salvaged-or-will-nanaia-mahuta-have-to-go/?msclkid=79bc6663a97a11ecbba8ec5a1ef9f4f9" target="_blank">here</a> and <a href="https://democracyproject.nz/2022/03/11/bryce-edwards-political-roundup-autumn-of-discontent-reflected-in-1news-earthquake-poll/?msclkid=7f8c8e1ea97a11ec851953c13b6e26be" target="_blank">here</a>). </p><p>That's partly the Commission's own doing. Its draft report had canvassed some radical proposals - potentially extending to "the structural separation of the major grocery retailers’ wholesale and retail businesses" (at 9.35.2) and "the facilitation of entry by an independent grocery wholesaler" (at 9.35.3), maybe even a government-owned or government-supported one (at 9.68). These were always unlikely to survive as final recommendations: the Commission had said (of structural separation) that it (and, I'd suggest, the other radical options) "would only be considered if other options were not feasible, had proved ineffective, or did not appear likely to improve competition within the desired timeframe" (at 9.64). </p><p>But despite the implausibility of a KiwiShop anytime soon, in the meantime some people's hopes had got raised, and as a process issue the Commission might usefully have a think about giving a clearer steer in its draft reports on where it is thinking of landing along the final recommendation spectrum. It does no good to get a reputation for Crying Wolf.</p><p>All that said, I don't go along with the apparently prevalent perception that the Commission's recommendations were not proportionate to the issues involved. They correctly seized on the main point: the first best solution to inadequate competition is new entry - think 2Degrees shaking up Telecom (as was) and Vodafone, or Jetstar giving Air New Zealand the hurry-up - and they identified a range of obstacles (planning laws, restrictive covenants, the overseas investment regime, the alcohol licensing regime) that could and should be cleared to make entry feasible. Good faith wholesaling to a new entrant is a useful starting point (I'd expected a bit more on access to a wholesale market, after seeing where the petrol market study had landed), and a code of conduct was always a certainty, following Australia's lead, to help address duopsony market power against suppliers. </p><p>That package, and the threat of something heavier duty at a three year review if the shape of competition isn't looking better, looked to me to be an adequate policy combo. And I don't share the general pearl-clutching about its supposed timidity, for two reasons.</p><p>One is that I'm not convinced that there was such an enormous problem to start with. For all the jumping up and down about extortionate profits by the New Zealand supermarkets, the rate of return on the average level of capital employed in the New Zealand supermarket trade is not that different to the rate of return on the capital employed in the overseas supermarket game, as Figure 3.4 (below) of the market study showed. To explain this away, you either have to say an average is meaningless (no it isn't), or that all the overseas supermarket markets are rorts, too (no they aren't).</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2N55usEAE_xFZprh3uKcUB2iAJSvCn5Qg8LapRGbxFUsRDUUbUC0bkLVymAN5j4BNsMSp8t3c-xrHGNRfPIpNxzgIOzqKR3YceORLiqVK6G-7TL_Pe_eLdEcJBo0N9pkeGrHeuYi0VTIDQ8sfsDmQ3m9n9GuoIVIlz0Pc9fFT0DZRF9jzKLKUwEXM/s1340/nz%20supermarkets%20roe%20vs%20overseas.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1102" data-original-width="1340" height="526" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi2N55usEAE_xFZprh3uKcUB2iAJSvCn5Qg8LapRGbxFUsRDUUbUC0bkLVymAN5j4BNsMSp8t3c-xrHGNRfPIpNxzgIOzqKR3YceORLiqVK6G-7TL_Pe_eLdEcJBo0N9pkeGrHeuYi0VTIDQ8sfsDmQ3m9n9GuoIVIlz0Pc9fFT0DZRF9jzKLKUwEXM/w640-h526/nz%20supermarkets%20roe%20vs%20overseas.jpg" width="640" /></a></div><br /><p>Return on capital employed is the best measure of potentially ineffective competition, but for what it's worth other measures of profitability (canvassed on pp60-64 of the report) showed the same thing: "Our analysis shows that profit margins for New Zealand’s major grocery retailers are broadly consistent with the sample of overseas grocery retailers" (p60).</p><p>The international price comparisons paint a darker picture, but even then it is not as black as the comparisons with the rest of the OECD would suggest. I like the general approach of benchmark comparators - countries that in some rough and ready way are 'like us' - and when the Commission did that exercise, it found (in Figure 3.13, shown below) that we still looked a bit on the expensive side, but not as obviously out of step as the whole-of-the-OECD comparison showed.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgc-WbMacbL4Hk5rdM90Vsc0lFhRD9UbWaDpTMqVjMz8CBRJcJf2zbh9FNNbKW0ZPl-yPC-XFSsuZzhL-Vw-qaZbMDkH9K3vN8LNrpCacIQ1__5n5LXHGl0LzDbvMlpSDrp2A8fKx604DY7olAHunJ8q2er4W4M-Gx9ODiLRK3xWod9tQM3LeBaoBFe/s1422/price%20comparators.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="800" data-original-width="1422" height="360" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgc-WbMacbL4Hk5rdM90Vsc0lFhRD9UbWaDpTMqVjMz8CBRJcJf2zbh9FNNbKW0ZPl-yPC-XFSsuZzhL-Vw-qaZbMDkH9K3vN8LNrpCacIQ1__5n5LXHGl0LzDbvMlpSDrp2A8fKx604DY7olAHunJ8q2er4W4M-Gx9ODiLRK3xWod9tQM3LeBaoBFe/w640-h360/price%20comparators.jpg" width="640" /></a></div><div><br /></div>So my general reaction is that the scale of the proposed recommendations needs to be measured against the size of the competition problem, and it is too easy to get carried away about the size of the problem.<div><br /></div><div>My second thought about the proportionality of the Commission's response is that they stayed on the correctly conservative side of respecting the incumbents' rights to earn a return on their investments. Some of the commentariat, on the other hand, would have happily embarked on extensive structural surgery, even though, as the Commission rightly said (on p404), "The lack of any essential facility or natural monopoly characteristic means that grocery wholesaling is not the type of industry ordinarily</div><div>regarded as potentially amenable to such intervention".</div><div><br /></div><div>The reality is that the two supermarket chains rolled out national chains of stores, organised the suppliers, built the loyalty card schemes, and in general successfully managed to establish large, logistically complex, wholesale and retail businesses. We may dislike it that at least for now we are on the receiving end of a duopoly, as we were pre 2Degrees, for example, but let's face facts. The incumbents did the initial hard yards. It's in the nature of commercial affairs that, for a time, the first people to roll out the infrastructure will reap the gains: indeed, in some industries it's the prospect of early-mover superprofits that propels the investment in the first place, à la Schumpeter.</div><div><br /></div><div>The best answer to this sort of situation is to help third and fourth players get into the game, especially when the first two have the advantage of Stiglerian barriers to entry: obstacles that new entrants have to surmount that the incumbents didn't (notably the limited availability of land zoned for supermarkets once the incumbents had got their share, and the restrictive and exclusive covenants inhibiting further grocery store development). Dismantle those, and then let's see what a Costco or an ALDI can do.</div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com1tag:blogger.com,1999:blog-7342528022617501525.post-21849018392030884062021-10-07T16:27:00.000+13:002021-10-07T16:27:12.674+13:00Reinventing the wheel?<p>In the armoury of regulatory interventions you might reach for to fix a market problem, I'd normally rank the Part 4 regime in our Commerce Act just above dosing with ivermectin and roughly on a par with sacrificing goats to Baal. I'd try everything else first.</p><p>But to my own surprise I'm beginning to wonder if it mightn't be a better answer to the Three Waters hoohah than the current "take the water assets away from councils and give them to four bigger entities with a convoluted governance structure".</p><p>There are various things going on in the water policy space, and no doubt conservation and Māori perspectives are at play, too. But if the big policy problem in water is (and I think it is) what economists like to call dynamic inefficiency - councils aren't minded, and/or able, to invest enough to keep the water assets in serviceable nick over the longer haul, hence iffy reservoir capacity (Auckland), poisonous water (Havelock North), pipes bursting in the CBD (Wellington) - then maybe it's time to deploy Part 4, or at least part of it, before creating whole new superstructures.</p><p>The bit of Part 4 that looks particularly fit for purpose is the 'information disclosure' regime. It's already been applied, for example, to electricity lines businesses: for lines businesses owned by local consumer trusts, who are in the same governance ballpark as water assets owned by councils, it's the only bit of Part 4 that typically applies (the rest of the lines businesses are required to disclose, too, but are also subject to a revenue control regime). Information disclosure can be a great way to surface whether an incumbent utility is not investing enough to keep the lights on, or the water flowing, over the long haul.</p><p>Here's an example of what's disclosed: it shows some of the 2020 data for Vector, which happens to be the lines network where we live. If you're interested in your own locality, head to <a href="https://comcom.govt.nz/regulated-industries/electricity-lines/electricity-distributor-performance-and-data/performance-summaries-for-electricity-distributors" target="_blank">this page</a>, and click on your local network on the map. It'll bring up the option of downloading a pdf with all the data for your place. There's a lot more beyond the graphs shown below, and you'll also find that each lines company is compared with its peers.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_iBYfe3FhSRQVVAQhDD1xT6iJSeIhJmai8xUExA8VoU7pXDGk-HbBtChIYQQs_mJWgqYUdF8vhuEywJu8Ud6gWqxR3xVdha7N6OU-UvjSRjGK8mQZQ6x4b2texcI9biRE1H2CNlvRPRU/s738/vector+1.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="491" data-original-width="738" height="426" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh_iBYfe3FhSRQVVAQhDD1xT6iJSeIhJmai8xUExA8VoU7pXDGk-HbBtChIYQQs_mJWgqYUdF8vhuEywJu8Ud6gWqxR3xVdha7N6OU-UvjSRjGK8mQZQ6x4b2texcI9biRE1H2CNlvRPRU/w640-h426/vector+1.jpg" width="640" /></a></div><br /><p>Vector's lines and cables are in good nick. Only a very small proportion is 'Over generic age', and in any event Vector's planned spending on replacement is well above the minimum required to keep the network in good shape.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgl7Fk2p8cY_dGjj_4A4gZwniZsZx40FLqnOUlG6f0w2KWN6LOICLsUk4eyCbjO8p-gqReyf9hiEV6lqoUpB0Tluw2sgcLIQGBIGj0kVkQDSPjhGycYdjvjVPIrd0Z4JAQXTuG5Vhd1n8c/s717/vector+2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="487" data-original-width="717" height="434" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgl7Fk2p8cY_dGjj_4A4gZwniZsZx40FLqnOUlG6f0w2KWN6LOICLsUk4eyCbjO8p-gqReyf9hiEV6lqoUpB0Tluw2sgcLIQGBIGj0kVkQDSPjhGycYdjvjVPIrd0Z4JAQXTuG5Vhd1n8c/w640-h434/vector+2.jpg" width="640" /></a></div><br /><p>Some of its switching gear is getting a bit long in the tooth, but again Vector has it in hand and plans to spend well above the minimum required to keep them chugging along. From a dynamic efficiency point of view it's all good. </p><p>You could easily imagine requiring all the water entities being asked to provide the corresponding data, which would stand a very good chance of zeroing in on the problem areas. Some of the councils, for example, are declining to join the proposed new four-entity regime because they say they're managing just fine, and that's a perfectly fair point to make: an information disclosure regime along these lines would prove their case.</p><p>And if there's a problem how would you go about fixing it? As it happens, we've got a worked example of that, too. It's Aurora, which to give it its due is in the process of fixing things, but which was starting from a very bad place as far as maintenance of its lines network went. </p><p>Aurora is the Dunedin Council owned network that serves Dunedin, central Otago, and Queenstown Lakes. As the Commerce Commission said <a href="https://comcom.govt.nz/__data/assets/pdf_file/0021/251643/Consumer-summary-paper.pdf" target="_blank">here</a> (p7) in March, "Aurora’s ageing network has been inadequately maintained due to underinvestment going back many years. As a result, it is providing an increasingly less reliable service to consumers. The average number and duration of outages has risen significantly over the past 10 years and would continue to worsen if action is not taken". Sound like the water problem? It does, doesn't it.</p><p>And the answer is a form of revenue control (Aurora is council owned, rather than consumer trust owned, so falls under the revenue control regime). The Commerce Commission has approved a 'customised price path' or CPP for Aurora, which will allow it to raise $563 million over the next five years to spend on bringing its network up to scratch. </p><p>As the Commission said (p5), "Our decision on Aurora’s capital spending reflects our view that it has largely made the case for the increased investment". Because it's such a big ask starting from where they were, the price increases will be phased in (p5): "To help mitigate the impact of increased bills on consumers we have decided to cap Aurora’s total line charge revenue over the five-year CPP period. Annual increases will be limited to approximately 10% per year plus or minus any changes from the Consumer Price Index (CPI) forecasts we have used". Something similar might well be needed for the water entities most behind with their upkeep.</p><p>My question is: if we've already got a policy regime that looks pretty useful at diagnosis (information disclosure) and treatment (a costed and funded remediation programme) for electricity lines businesses (and gas pipelines, plus airports are under info disclosure), who do we need to re-invent the wheel for water?</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-44528499866845810982021-09-24T13:35:00.000+12:002021-09-24T13:35:41.507+12:00Win some, lose some<p>From the outside the Commerce Commission's Fair Trading Act case against Bunnings always looked a difficult one, and I can't say that I'm hugely surprised that Judge Gibson in the Auckland District Court found for Bunnings on all 45 allegations. You can find the decision <a href="https://comcom.govt.nz/__data/assets/pdf_file/0025/266218/Commerce-Commission-v-Bunnings-Limited-judgment-3-September-2021.pdf" target="_blank">here</a> on the Commission's website (though it's one of those annoying pdf's that won't let you select blocks of text).</p><p>The judge found that consumers were unlikely to have interpreted Bunnings' ads in a literal way but rather, at [136], "would take into account the nature of the industry, the size of the stores, the number of SKU's [stock keeping units, individual items on the shelves] and the general impossibility of ensuring that on each day every SKU in Bunnings stores was the lowest price. Consumers would also consider the LPG [the lowest price guarantee, i.e. the well known "if you happen to find a lower price we'll beat it by 15%"] alerted them to the possibility that not every item in Bunnings may be the lowest price but providing a remedy to achieve that". </p><p>The "if you happen to find a better price" wording was self-evidently fatal to any overly literal reading of Bunnings ads, so the alternative argument run by the Commission was that, even if you cut Bunnings some slack over the practicalities of trying to monitor how its own 62,000 SKUs compared with the many tens of thousands of its competitors' prices, they weren't in fact making a decent enough fist of it to be able to claim that their prices were generally lower than their competitors.</p><p>That fell over, too, because none of the comparative price surveys put before the court was statistically robust enough to be relied on. The Commission argued (as I would have) that none of these surveys may have been perfect on its own, but taken in the round they suggested such and such. This "triangulation" didn't impress the judge who at [141] took (my wording) a Garbage In, Garbage Out approach, which is fair enough when the standard of proof in the proceedings was "beyond reasonable doubt".</p><p>The Commission has taken it philosophically (response <a href="https://comcom.govt.nz/news-and-media/media-releases/2021/court-dismisses-commerce-commission-case-against-bunnings" target="_blank">here</a>). But it left me wondering: while this was formally a Fair Trading Act matter, was it also expressing a more Commerce Act based concern about lowest price guarantees?</p><p>What concern, you may well wonder: what could be more competitive and pro-consumer than propositions such as offering to beat a competitor's price? What sort of twisted logic would see any harm in that?</p><p>The alternative logic goes like this. Suppose a new model of Kindle comes out, and I advertise it at $299 plus a guarantee to match or better any lower price from a competitor. My competitor has also got a stock of the Kindles and is wondering what to do. She sees my ad, and (the argument goes) reckons there's no point in trying to undercut me, as it'll do her no good: I'll just match her, she won't win any extra sales, and we'll both be worse off. So she prices at $299 as well. End of price competition for the consumer.</p><p>And there are other ways the lowest price guarantee might work against consumers' interests. A shopper may see my lowest price guarantee, and conclude there's no point in shopping around. Knowing that I've defused at least some comparative price searching might encourage me to set a higher price in the first place.</p><p>None of this, by the way, applies to Bunnings. As you can see in the judgement at [35-6], they genuinely went out to do what it said on the tin. </p><p>There might be cases of nudge nudge, wink wink, see you in the bar at the next trade fair, where the competition is more apparent than real. But it wouldn't be my default position on the likes of best price matching. If a company is going to some trouble to position itself as an "everyday low prices" supplier, chances are that's what's going on. Alongside Garbage In, Garbage Out, maybe another computer motto is the best take: What You See Is What You Get.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-36129485151699658432021-09-15T10:59:00.001+12:002021-09-15T11:41:36.457+12:00One never knows, do one<p>Yesterday the Economic Development, Science and Innovation Select Committee <a href="https://www.parliament.nz/resource/en-NZ/SCR_115852/48191474b94d770dff2d7670b28d29db35bbb920" target="_blank">reported back</a> on the Commerce Amendment Bill, and there was (at least from my perspective) one pleasant surprise.</p><p>First the big stuff. The proposed change to s36 of the Commerce Act, which deals with abuse of market power, has got the tick. We'll be shifting to Australia's "effects based" test and getting away from our current "take advantage" wording. </p><p>For those whose eyes have just glazed over, it means that when a company with market power is brought before the courts for throwing its weight around in an anti-competitive way, the judges will stop asking, "Would a company otherwise just like this one, but without the market power, have done this? It would? No case to answer, get outta here". </p><p>The problem with that line of reasoning, which follows on from the current s36 wording, is that it misses the essential point: when something is done by a company with market power, it may have different consequences compared to when a non-powerful company does it. To fix this, the new formulation will just look at the effects, or likely effects, and will stop speculating about what non-powerful companies might have done.</p><p>Under both the current s36 and the proposed new s36, clear anti-competitive purpose will also land you in court, as it should: if the e-mail trail shows "Hah! Competitors will never get a look in if we cunningly tweak the software", you'll still be bang to rights. In practice, the big bunfights in court over abuse of market power tend not to feature obviously incriminatory evidence of purpose, and tend to range over the effects battlefield, so the law change fixes up the important aspect.</p><p>As well as being the intellectually correct thing to do, the new s36 will harmonise our law with Australia's, which is helpful given the presence of so many companies on both sides of the ditch.</p><p>The National members on the Committee didn't agree: they felt that "firms with market power risk liability for unforeseeable future consequences, leading to overly-conservative decision making on their part". That's fair enough: reasonable people across many jurisdictions have struggled with finding the right definition. But for mine (and it's been the Commerce Commission's view, too), the current law was broken, and couldn't do what it was meant to. </p><p>That's a bit of a worry in an economy with its fair share of concentrated industries, where there is scope for the 600 pound gorillas to drive the smaller apes away from the bananas. That said, big companies generally play fair, and stand-over corporate bullying doesn't come along all that often, but when it does, you want to be able to deal with it. The new s36 is well worth trying.</p><p>And that pleasant surprise?</p><p>I'd made <a href="https://www.parliament.nz/resource/en-NZ/53SCED_EVI_108304_ED562/2369aa72207085cc72bc356f873d928b109b724c" target="_blank">a submission to the Committee</a> and somewhat cheekily, I'd included an off-topic idea that while they were looking at other changes to the Commerce Act</p><blockquote><p>One not included, but worth adopting, would be to reinstate the former section 63 of the Commerce Act (repealed in 1990) which had allowed the Commission to issue provisional authorisations. The value of this ability has been shown in Covid circumstances in Australia, where the Australian Consumer and Competition Commission (ACCC) has made excellent use of its ability to respond quickly to authorisation requests. The Commerce Commission under recent NZ Covid legislation temporarily had this power: it should be made permanent</p></blockquote><p>And blow me down if the Committee didn't run with it and agree:</p><blockquote><p>there may be situations where the need for authorisation is time sensitive. Recognising this, the COVID-19 Response (Further Management Measures) Legislation Act 2020 created a temporary ability for the Commerce Commission to issue “provisional authorisation” to an applicant ... We believe that the changes made by the COVID-19 legislation should be made permanent. COVID-19 has demonstrated that there may be compelling public interest reasons to authorise conduct before the full procedure for deciding an application can be completed. Making this permanent would improve the Act’s administration (p3)</p></blockquote><p>Which (despite my simultaneous complete failure to convince the Committee to put better bounds around the Commerce Commission's proposed information-sharing powers) is a good example of why people should put in submissions. You may be tempted to think, what's the point: don't. A good Select Committee will genuinely kick the tyres, as this one did, and in the background the Committee will have expert policy assistance from the relevant Ministry (in this case, MBIE), and if your idea has legs, there's a fighting chance it'll get a decent hearing.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-76780025465896613592021-09-08T12:14:00.001+12:002021-09-08T13:52:13.618+12:00Sterny McSternface<p>Something's set them off. </p><p>I've just noticed that at the end of last month the Commerce Commission came out with a stern <a href="https://comcom.govt.nz/news-and-media/media-releases/2021/commission-issues-anti-collusion-reminder-to-businesses-supplying-essential-services" target="_blank">"anti-collusion reminder to businesses supplying essential services"</a>. There was a nod towards the exigencies of Covid - "some businesses able to operate under level 4 restrictions may need to cooperate to ensure New Zealanders continue to be supplied with essential goods and services" - but the bulk of the message, and its clear overall tone, was that some businesses could have been tempted to overstep the mark. </p><p>When the "reminder" includes how whistle blowers can dob in a cartel, and finishes up with a paragraph pointing out that cartel behaviour is now a criminal offence, you get the strong feeling that the Commission is not a happy bunny.</p><p>Which brings us back to an oddity of the first lockdown in 2020 (<a href="http://economicsnz.blogspot.com/2021/03/what-if-they-threw-party.html" target="_blank">"What if they threw a party..."</a>). </p><p>Then - and again now - there were all sorts of Covid-related stresses on businesses: on supply chains, on resources, on lenders and landlords trying to respond to the predicaments of their lockdown customers. In many cases, cooperation would have been in the public interest: hospitals, for example, might agree on which patients should go where, to help manage capacity for Covid ICU beds. Supermarkets might jointly use scarce lorries to get stuff into the shops.</p><p>In Australia, the ACCC got lots of requests along those lines, and was, rightly, authorising herds of them, and, importantly, it was doing it very quickly to meet the urgent need. It wasn't being silly about it - the authorisations tended to come with controls to make sure they were limited to the Covid issues at hand - but it was chucking them out the window at a rapid rate. Last month, for example, <a href="https://www.accc.gov.au/media-release/banks-covid-19-relief-program-authorised-to-continue" target="_blank">it rolled over its interim authorisation</a> of "temporary and limited coordination between the ABA [Australian Banking Association] and participating banks to defer loan repayments and waive certain banking fees for small businesses impacted by the pandemic". Absolutely.</p><p>Normally, our Commission can't do these quick fixes (daftly, its power to issue provisional authorisations was taken away years back, for reasons nobody can now recall). But, while there is an "epidemic period", as there is now, it can, under emergency legislation whacked through last year (details <a href="https://comcom.govt.nz/business/merging-or-acquiring-a-company/authorising-anti-competitive-transactions-that-will-likely-benefit-new-zealand/authorisations-under-the-covid-19-response-further-management-measures-legislation-act" target="_blank">here</a>).</p><p>But here's the thing. </p><p>Nobody's turned up and asked for one. Which is distinctly odd. We have had the same stresses the Aussies had, but lots of authorisations there, none here. Qué?</p><p>I hope it's not because businesses think the Commission will be too slow, and by the time they get the slip of paper the bananas will have rotted on the wharf. And you can see why they might think that: in the normal course of affairs, the Commission doesn't exactly sprint through authorisations. Yes, they can be complex propositions where estimating the benefits and costs is hard, but even in relatively straightforward ones - like <a href="https://comcom.govt.nz/news-and-media/media-releases/2021/commerce-commission-issues-determination-on-hp-new-zealands-application-to-engage-in-resale-price-maintenance" target="_blank">the HP one</a> it's just given the green light to - it takes its own time. It had the issues identified in a commendably quick fortnight. And then it thought about them for four months.</p><p>It doesn't help that we're in a chicken and egg situation: without evidence of a quick response, businesses may flag away applying, but if there are no applications, the Commission can't show it can indeed hop to it when needs must.</p><p>Or maybe it's just the Kiwi way: we tend to be relatively informal and to muck in even before any contract is signed, and maybe there is socially useful cooperation going on and to hell with the paperwork. </p><p>Let's hope it's one of those relatively benign reasons. Because if some businesses have used Covid to price fix, then they deserve anything the Commission throws at them - not to mention the risk of a PR disaster.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-13738481787021043482021-08-09T15:59:00.000+12:002021-08-09T15:59:50.167+12:00The future is hybrid<p>The <a href="https://www.clpinz.org.nz/" target="_blank">Competition Law and Policy Institute of New Zealand</a> (CLPINZ) held its 32nd annual workshop in Wellington over the weekend. As is the norm these Covid-plagued days, it was a 'hybrid' event, with people having the option of attending in person or online: the Commerce Commission's going the same way <a href="https://comcom.govt.nz/news-and-media/events/competition-matters-2021" target="_blank">later this year</a>, and the NZ Association of Economists ended up there perforce, when Day 1 of <a href="https://www.nzae.org.nz/events/nzae-conference-2021/" target="_blank">their conference</a> got away in person but Day 2 fell foul of a Wellington lockdown and was rescheduled online. </p><p>My guess is that even when Covid is gone, we'll stick with the hybrid model: there will always be takers for both options, and (let's face it) the online option makes for much cheaper overseas speakers. Plus the technology is in the bag: Charlotte Emery and her <a href="https://conference.nz/" target="_blank">Conference Innovators</a> team did a fine job successfully juggling speakers from Washington DC, Brussels, Sydney and Melbourne, as well as hosting online attendees from Australia and New Zealand. Hat-tip, too, to workshop dinner venue <a href="https://dockside.co.nz/" target="_blank">Dockside</a>: confit duck, twice-cooked pork belly, and dark chocolate torte worked for me.</p><p>The big opening keynote, chaired by <a href="https://www.laneneave.co.nz/person/anna-ryan/" target="_blank">Lane Neave's Anna Ryan</a>, was the University of Chicago's <a href="https://www.chicagobooth.edu/faculty/directory/c/dennis-w-carlton" target="_blank">Dennis Carlton</a> on merger retrospectives. This wasn't Dennis's first CLPINZ rodeo - he gave the keynote at CLPINZ #21 in 2010 - and it was great to have him back as one of those heavy academic hitters who can put economics across in plain English and whose analysis is informed by getting his head around real world cases (he was involved in Air New Zealand / Qantas, for example). Dennis said that competition authorities obviously ought to look back and see how their merger decisions played out, but they should focus not just on the market pre- and post-merger, but also, in the interest of upping their game, on how well their modelling and analysis at the time actually played out later. One of his examples was US airlines, where six big airlines merged down to three (Delta/Northwest, United/Continental, American/US Airways): you'd guess (well, I would, anyway) that this would not be good for the travelling public, but in the event his econometrics showed quite clearly that "these mergers have been pro-competitive, with no significant adverse effect on nominal fares and with significant increases in passenger traffic as well as capacity".</p><p>Commentator, NZ ComCom chief economist Lin Johnson, spoke about local merger experience. My takeaway was that it could be a temptation to be overoptimistic about the prospect of expansion, entry, re-entry, or imports effectively constraining the merged entity. For overseas constraints, like new entry or import expansion, it's particularly important to make sure that new entry is indeed on the strategic agenda of the mooted entrant, and that (even if willing to come in) world market conditions don't make other options elsewhere more attractive. And it's worth checking the sensitivity of would-be import expansion to small changes in exchange rates. And both Dennis and Lin talked about the importance of thinking ahead about the sort of data you'd like to have about post-merger outcomes.</p><p>Next up, chaired by <a href="https://www.russellmcveagh.com/our-people/troy-pilkington" target="_blank">Russell McVeagh's Troy Pilkington</a>, we had <a href="http://www.johnland.co.nz/" target="_blank">John Land</a> on 'Anti-trust and IP' (i.e. intellectual property), with Russell McVeagh's <a href="https://www.russellmcveagh.com/our-people/petra-carey" target="_blank">Petra Carey</a> as commentator. The argument was that proposed changes to s36 of the Commerce Act (moving to an 'effects' test for abuse of market power) and to s45 (repeal of the provision whereby merely enforcing your patent rights didn't put you foul of s36) could end up interacting in an unhelpful way. The risk is that perfectly unexceptionable commercial patent-licensing, which could even be efficient and pro-competitive, could be miscast as having the effect of constraining competition. If I were the Economic Development, Innovation and Science Select Committee, which will let us know <a href="https://www.parliament.nz/en/pb/bills-and-laws/bills-proposed-laws/document/BILL_108304/commerce-amendment-bill" target="_blank">its views on the Commerce Amendment Bill</a> in mid September, I'd be tempted to rethink repeal of s45.</p><p>Onwards to 'Economic regulation of water', chaired by <a href="https://chapmantripp.com/our-people/simon-peart/" target="_blank">Chapman Tripp's Simon Peart</a>, with <a href="https://www.nera.com/experts/dr--william-s--taylor.html" target="_blank">NERA's Will Taylor</a> and <a href="https://www.waternz.org.nz/" target="_blank">Water New Zealand</a>'s CEO Gillian Blythe as speakers - Will laying out exactly what the regulatory issues are in the current programme of 'Three Waters' reform (drinking, storm, and waste), and the tools that might be used to achieve them, and Gillian giving us a lot of helpful background on how the industry operates. If this is all news to you (as it mostly was to me), then you'll find the reform proposals <a href="https://www.dia.govt.nz/Three-Waters-Reform-Programme" target="_blank">here</a>, while Gillian pointed us to <a href="https://www.waternz.org.nz/NationalPerformanceReview" target="_blank">this very useful trove</a> of water performance data. Sadly, the story hitherto is one of an immensely fragmented system with a chronic infrastructural deficit and periods of acute crisis (think Auckland's inadequate reservoirs, Havelock North's drinking water, Wellington's pipebursts). Incentives to foster dynamic efficiency have clearly either fallen down or are perverse (eg electoral incentives to keep the rates down today while the pipes burst tomorrow). The proposed consolidation into four national water service entities looks a useful first step: whether better dynamic incentives will kick in, though, isn't at all clear.</p><p>Session 4, chaired by <a href="https://www.bellgully.com/our-people/glenn-shewan" target="_blank">Bell Gully's Glenn Shewan</a>, was on media bargaining codes, which took us into the competition issues of bargaining imbalances between the big social media platforms and the news media, and what, if any, compensation should be paid by the likes of Facebook and Google for the public good of news provision. <a href="https://www.kwm.com/en/au/people/wayne-leach" target="_blank">King & Wood Mallesons' Wayne Leach</a> took us through the system Australia has set up (it's Part IVBA of their Act), while we got New Zealand industry viewpoints from Stuff's Editor in Chief Patrick Crewdson and NZME's General Counsel Allison Whitney. Wayne posed a number of questions, with maybe the big one being whether competition law can, or should, be extended to solve all the world's ills. And while Patrick claimed not to be an economist, he nonetheless managed to reason his way exactly to where an economist would have got on externalities (tax negative externalities like conspiracism and fake news, subsidise positive externalities like non-partisan newsgathering).</p><p>If session 4 had wondered whether competition law has a role in regulation of digital platforms, session 5, chaired by <a href="https://www.dlapiper.com/en/newzealand/people/m/murray-alicia/?tab=credentials" target="_blank">DLA Piper's Alicia Murray</a>, wondered what, if anything, it could or should do to assist with rolling back climate change. Brussels based <a href="https://www.slaughterandmay.com/people/jordan-ellison/" target="_blank">Jordan Ellison from Slaughter and May</a> took us through how European competition law can in theory be compatible with firms' cooperating for environmental benefit: a 'carbon defence' would apply if, say, three firms collectively agreed on some action to eliminate X tonnes of emissions, and would be safe from challenge if the value of any subsequent price rise to consumers was less than the overall saving to society from the emissions saved. The commentator, principal economist Reuben Irvine of ComCom, reminded us of 'Sustainability and Competition - Note by Australia and New Zealand' (available, with other useful stuff, <a href="https://www.oecd.org/daf/competition/sustainability-and-competition.htm" target="_blank">here</a>), where the good news is that in both countries the definition of a net benefit is wide enough to encompass things like environmental payoffs (as, for example, it was also wide enough to accommodate the democratic value of media plurality in the mooted Stuff/NZME merger). We'd have less difficulty accommodating genuinely (net) beneficial cooperation than the Europeans might. That said, inter-competitor agreements shouldn't be the default, and businesses shouldn't be able to stop competing in the sustainability dimension of their product offerings without some vigorous tyrekicking.</p><p>And finally we got to 'Consumer data right and open banking', chaired by moi but with the heavy lifting on the session structure largely down to Will Taylor. <a href="https://www.allens.com.au/people/h/rosannah-healy/" target="_blank">Rosannah Healy from Allens in Melbourne</a> took us through the Aussie experience with legislating for consumers' control over the assignment and use of their data: they've been up and running since 2017, while we're still at the stage of planning legislation for next year (you can read our policy decision <a href="https://www.beehive.govt.nz/release/govt-agrees-establish-consumer-data-right" target="_blank">here</a>). And <a href="https://www.akahu.io/about-us/" target="_blank">Josh Daniell</a>, CEO of <a href="https://www.akahu.io/" target="_blank">open finance platform Akahu</a> (mission, "to empower consumers to gracefully control and leverage their personal data") showed us what sorts of applications we are actually likely to see in New Zealand. The CDR is a really exciting development: in principle, it should reduce switching costs and enable new entry in sectors such as banking (typically one of the first cabs off the rank when CDRs get underway), electricity, and telecommunications. In practice, it tends to take quite a bit of drawn-out sector-specific customisation, but I wouldn't underrate its potential to be a game-changer over the longer haul.</p><p>Two final thoughts. One was that the workshop would would have been good in any event, but got an extra boost from hearing from industry players like Gillian, Patrick, Allison, and Josh: at our table (a motley crew of economists, lawyers, officials and enforcers), we all felt we learned a lot from them. And the other, which emerged across various sessions, was that the Commerce Act is looking decidedly moth-eaten. There have been targeted reviews of bits of it (like <a href="https://www.mbie.govt.nz/business-and-employment/business/competition-regulation-and-policy/reviews-of-the-commerce-act-1986/targeted-review-of-the-commerce-act-2015/" target="_blank">the one</a> that culminated in the current s36 proposals and the, overdue, ability for ComCom to conduct market studies), but when you look at the current inability of ComCom to establish industry codes (à la supermarkets inquiry), or to accept behavioural undertakings in mergers, or to issue interim authorisations as it used to be able to, or elsewhere (eg the clunky wording of the retail price maintenance sections), it looks like it's time for a vigorous spring clean.</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com1tag:blogger.com,1999:blog-7342528022617501525.post-61114003550290634032021-06-30T13:23:00.000+12:002021-06-30T13:23:35.900+12:00What got snuck in<p>We only got through Day 1 of last week's NZ Association of Economists' annual workshop before the Plague shut us down, but it was interesting while it lasted (full programme <a href="https://www.nzaeconference.co.nz/programme-day-1" target="_blank">here</a> - there's a fair smattering of the papers available to download), and on the positive side at least we snuck one day in, unlike the total lockdown wipeout of 2020.</p><p>The first keynote was ecological economist <a href="https://www.nzaeconference.co.nz/keynote-speakers" target="_blank">Marjan van den Belt</a> on 'Aoteanomics; A Vision for a Thriving, Just and Sustainable Aotearoa NZ' (brief abstract <a href="https://18226444-6408-4773-9a1d-48e1c6742f3e.filesusr.com/ugd/623971_226cc49949ec4e4ba141be97b4c6508b.pdf" target="_blank">here</a>). If you're a fan of, say, Kate Raworth's <i>Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist</i>, then this was for you. I liked her emphasis on systems thinking/modelling that captures all the positive and negative aspects of any policy, and accounts for the inter-relationships between the various moving parts. </p><p>But I didn't agree that economics as we all know and love it today isn't up to, or interested in, handling issues like climate change or other environmental degradation: you don't get far into an economics course these days without bumping into 'externalities' and how to deal with them. And she's what I might call a technology pessimist about the ability of technological change to get us out of the climate and pollution hole - "we can't efficiency our way out" as she put it - whereas I'd point to the likes of the plummeting cost of solar energy or indeed the speed with which Covid vaccines were developed. The last 20th / early 21st century is an odd time to be downbeat about inventiveness.</p><p>From the concurrent session options, I picked 'Auckland Council - Urban Economics'. The big takeaway for me was the work done by David Norman (the former chief economist for the Council) and his colleague, now acting chief economist, Shane Martin, on whether the planning constraints which apply inside the Rural Urban Boundary (RUB) are responsible for the very high prices of Auckland housing land when compared to land outside it. As an Auckland resident regularly gobsmacked by the price of land, I'd have been prepared to bet a reasonable amount of money that they did, but at least for now I've been disabused. After comparing like-for-like land (eg correcting for the value of closeness to amenities and a zillion other hedonic features) there's virtually no RUB factor, as shown below (from the version of <a href="https://www.aucklandcouncil.govt.nz/about-auckland-council/business-in-auckland/Reports/does-the-rub-impose-a-price-premium-on-land-inside-it-20-Feb-2020.pdf" target="_blank">the paper</a> available on the Council's <a href="https://www.aucklandcouncil.govt.nz/about-auckland-council/business-in-auckland/Pages/economic-advice.aspx" target="_blank">Economic Advice page</a>).</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCYiaF3Ihwu1hkMGdfUl67egf8fvv5yb9bNh5SyyDoHoQhn_O-1f_NZgdncyxDxMrIBNDZdSHl-J62ED1QaI613pV2cPv_6s4nx5JAinCHx3-2WxYdU_y-euwcbgV1_dtXKfzls9f4nN8/s713/rub+factor.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="501" data-original-width="713" height="450" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCYiaF3Ihwu1hkMGdfUl67egf8fvv5yb9bNh5SyyDoHoQhn_O-1f_NZgdncyxDxMrIBNDZdSHl-J62ED1QaI613pV2cPv_6s4nx5JAinCHx3-2WxYdU_y-euwcbgV1_dtXKfzls9f4nN8/w640-h450/rub+factor.jpg" width="640" /></a></div><div><br /></div><div>After coffee it was time for Motu's Arthur Grimes on <a href="https://18226444-6408-4773-9a1d-48e1c6742f3e.filesusr.com/ugd/623971_bb5f556bda14458b8fb0af7bee37b0c0.pdf" target="_blank">'Reinterpreting Productivity: New Zealand’s Surprising Performance'</a>. Well worth reading: while the stylised narrative is that New Zealand has gone to hell in a handbasket in terms of relative international performance over time, Arthur argued (pp22-3) that "The country enacted reforms in the 1980s and early 1990s that improved allocative efficiency as well as technical efficiency. The result has been one of the strongest performances of any developed country in the growth of sustainable consumption possibilities over the second 24 year period covered by our data" (i.e. the second half of 1970-2018).</div><div><br /></div>In the afternoon the 'Household Economics' session had two papers looking at how extra tax credits and extended parental paid leave since 2018 had worked out (one paper is up, <a href="https://18226444-6408-4773-9a1d-48e1c6742f3e.filesusr.com/ugd/623971_0412c5be023a48f6ac70c49f884ce0ad.pdf" target="_blank">here)</a>: my overall impression was they made a difference (in a good way) but more could be done. Victoria's Norman Gemmell presented on behalf of his co-authors Nazila Alinaghi and John Creedy on <a href="https://18226444-6408-4773-9a1d-48e1c6742f3e.filesusr.com/ugd/623971_ff611cb5633446cdacf261e7ff445004.pdf" target="_blank">'Do Couples Bunch More? Evidence from Partnered and Single Taxpayers'</a>, which looked at the bunching of people's tax returns around marginal tax rate thresholds. <div><br /></div><div>There were questions from the audience suggesting that it looked like tax evasion: it isn't (or not necessarily), because (a) that's the way the tax system is, or as the paper says (p25) the system "imposes relatively weak constraints on intra-family income sharing" and (b) the income split is inherently arbitrary for self-employed couples. If one partner stays home to let the plumber in while the other goes out to meet a client, who's contributed what? It was also a reminder that while the all-knowing always-calculating <i>homo economicus</i> may be a caricature of how people behave, people aren't stupid, either, and are perfectly capable of making fine adjustments to their affairs to their own best advantage.<p>Finally I went to the 'Commerce Commission: Market outcomes in the retail fuel and electricity markets' session (natch). Quick hat-tip to the Commission and the NZAE - there were years when the conference carried little or nothing in the competition / industrial organisation / regulation space, but in the last few years it's had its own regular slot.</p><p>The Commission's Ben Harris and Imogen Turner spoke on 'Valuing the harm to consumers in electricity markets'. I'd imagined beforehand that this might have been a go at estimating how much people were missing out by being on inappropriate pricing plans, but it actually looked at the value consumers ascribe to not suffering power outages. Human nature being what it is, people say they'd be hugely put out by an outage inflicted on them. But when offered cold cash to accept an outage, they turn out to take a much lower amount. Funny that. Why does the Commission care? Because the valuation goes into the regulatory regime to prevent the risk of electricity lines companies overbuilding ('gold plating') their asset base and providing levels of reliability that consumers do not actually want. More positively, it feeds into an incentive system rewarding lines companies for better-than-expected outage performance.</p><p>Finally Commerce Commissioner John Small took us over 'Empirical analysis on the retail fuel market study' (the study itself is <a href="https://comcom.govt.nz/__data/assets/pdf_file/0028/193915/Retail-fuel-market-study-Final-report-5-December-2019.PDF" target="_blank">here</a>) and as part of it reminded us of this graph.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgM5mmSQ15ExI_sa8Qu9ukfz1e26l2bz_xNvAh4foO8zQ52FGtsD3jk1ImlGhzpP8w9C49F_3tBEYYcWk-zSZLjLyXwZJ82b4ik_niI1zVl3A6HlhLSRQtAavO-ANltE_k8b1eYD2xTYKg/s807/margins+and+MPP.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="520" data-original-width="807" height="412" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgM5mmSQ15ExI_sa8Qu9ukfz1e26l2bz_xNvAh4foO8zQ52FGtsD3jk1ImlGhzpP8w9C49F_3tBEYYcWk-zSZLjLyXwZJ82b4ik_niI1zVl3A6HlhLSRQtAavO-ANltE_k8b1eYD2xTYKg/w640-h412/margins+and+MPP.jpg" width="640" /></a></div><div><br /></div>The dotted lines are when Z Energy was publishing the 'MPP', "the price that is used at most of Z Energy’s retail sites in the South Island and lower North Island" (market study, p296). The Commission said that, while there could be other explanations, from the graph "it appears that average margins increased during the period when the daily MPP was published, and have levelled off or decreased since publication ceased ... The evidence therefore appears to support our conclusion that the retail market is<div>conducive to tacit coordination through price transparency and leader-follower pricing" (p298).</div><p>The petrol industry is getting close to the pointy end of implementing the recommendations of the market study (a wholesale market, liberalised wholesale supply contracts, publicising the price of 95 octane, and enhanced information provision). My guess would be that the Commission will wait and see how effective they've been, but at some point I'd bet that they will be combing the evidence to see if they've dealt to that "tacit coordination".</p></div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-77443128473995286592021-06-28T16:26:00.000+12:002021-06-28T16:26:34.084+12:00So far so good. What next for fiscal policy?<p>If the Plague had indeed broken out big time last week in Wellington, it would have taken out a high proportion of the country's economists.</p><p>No, don't be like that, and put that champagne back in the fridge - fingers crossed, our Sydney visitors don't appear to have spread the pandemic here. But if they had, there was a combo of the Treasury / Reserve Bank workshop on fiscal and monetary policy in the wake of Covid (Tuesday), and the annual shindig of the New Zealand Association of Economists (Wednesday and Thursday, though Thursday got cancelled when Level 2 was brought in). Just about everyone with an interest in macro policy and economic research were all in the same lecture halls at Vic - a very short virus-exposed walk from Rydges Hotel, one of the 'locations of interest'.</p><p>Tuesday's workshop (full programme <a href="https://www.rbnz.govt.nz/research-and-publications/seminars-and-workshops/fiscal-and-monetary-policy-in-the-wake-of-covid" target="_blank">here</a>) kicked off with <a href="https://www.treasury.govt.nz/publications/speech/new-challenges-macroeconomic-stabilisation-policy-role-fiscal-policy" target="_blank">a keynote</a>, 'New challenges for macroeconomic stabilisation policy: The role of fiscal policy', from Treasury Secretary Caralee McLiesh. What I took away was that we've done well through Covid: as she said (p3) "Overall these [supportive monetary and fiscal policy] interventions, alongside a health response that successfully eliminated COVID-19 in New Zealand, have been effective in supporting the New Zealand economy, which has outperformed our forecasts since the beginning of the pandemic". By international standards we've ended up in a good place, and pushed the fiscal lever hard to get there, as these graphs from her speech show.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmnOxGRfmGRLZSOBl5DA-9-ClBJ7erUh6LoudfegOPfMaWuYLRyWe67jaJOmmTDKfFxXy8QPQ_USFy2oxKs1sbBEhIukInSO4JJvq7ON-tEd1ZDyQ4c8BtciUJ4Jrkm84PfCaVELIoUMQ/s798/gdp+outcome.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="457" data-original-width="798" height="366" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjmnOxGRfmGRLZSOBl5DA-9-ClBJ7erUh6LoudfegOPfMaWuYLRyWe67jaJOmmTDKfFxXy8QPQ_USFy2oxKs1sbBEhIukInSO4JJvq7ON-tEd1ZDyQ4c8BtciUJ4Jrkm84PfCaVELIoUMQ/w640-h366/gdp+outcome.jpg" width="640" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfL3f0BcAKDqUx_VUR1csgTOEsVeYpHtsNGf7xsKvQPWeIeTV07nLkyjC6vWqAiT_bYFDzx6F8bV7FNQLciAN-xu5xvZ7CYMyCYuIEVhj7LGbrIc5hQ9N-OwhNmFwzhXF3dskXR2d8vdE/s751/size+of+fiscal+boost.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="455" data-original-width="751" height="388" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhfL3f0BcAKDqUx_VUR1csgTOEsVeYpHtsNGf7xsKvQPWeIeTV07nLkyjC6vWqAiT_bYFDzx6F8bV7FNQLciAN-xu5xvZ7CYMyCYuIEVhj7LGbrIc5hQ9N-OwhNmFwzhXF3dskXR2d8vdE/w640-h388/size+of+fiscal+boost.jpg" width="640" /></a></div><div><br /></div>Fiscal policy fired up quickly (even if a begrudging part of me wants to add "for once"), and got the support out in literally hours, in some cases, to applicants for wage subsidies. And there's been a corresponding re-assessment of how well fiscal policy can help stabilise an economy against cyclical shocks, with our wage subsidies and the Australians' and Americans' cheques-in-the-mail approaches all clearly effective, and in a timely way.<div><br /></div><div>The supposed pre-Covid consensus that monetary policy was the best cycle stabilisation tool and that fiscal policy would be too lumbering to do any good, has been rather overstated. It was never that clearcut: monetary policy, after all, famously operates through long and variable lags, so isn't necessarily the quick fix some folks touted, and fiscal policy isn't always on a 'turn the first sod in twenty years' Transmission-Gully-style timetable. But in any event the new consensus is that they can both be deployed to good effect early in the piece.</div><div><br /></div><div>Some commentators see a new, bigger role for fiscal policy as potential over-reach. Michael Reddell in his blog piece on the workshop, <a href="https://croakingcassandra.com/2021/06/24/fiscal-policy-in-the-wake-of-covid/" target="_blank">'Fiscal policy in the wake of Covid'</a>, felt that "When a half-baked loaf is finished cooking it can be a fine thing, but this loaf seems to need a lot more work before New Zealanders should be rushing to embrace a much more active role for fiscal policy or a lot more public debt". The NZ Initiative's Eric Crampton in '<a href="https://www.stuff.co.nz/business/opinion-analysis/125574604/govt-making-the-case-for-higher-levels-of-debt-for-longer" target="_blank">Govt making the case for higher levels of debt for longer</a>' said that "If the core of the public sector is happy with higher debt levels, despite clear failures in ensuring that funded projects pass any reasonable cost-benefit assessment, greater prudence is needed in how that debt is issued". </div><div><br /></div><div>The exact scale and scope of future fiscal activism is still in sum very much up in the air, though if McLiesh is right, and we are indeed headed into a world of permanently lower interest rates, then I hope one outcome is that we pull finger and get on with the overdue infrastructure we need and which have now become significantly cheaper to finance. Which I've been saying for at least the last five years ('<a href="http://economicsnz.blogspot.com/2016/03/a-once-in-generation-opportunity.html" target="_blank">A once in a generation opportunity</a>'). </div><div><br /></div><div>In any event you don't have to just sit there and take what's dealt to you in the fullness of time. Treasury is <a href="https://www.treasury.govt.nz/information-and-services/nz-economy/reviewing-our-macroeconomic-frameworks/reviewing-new-zealands-macroeconomic-framework" target="_blank">reviewing our macroeconomic frameworks</a>, and you'll get your chance to put in your tuppence worth. There's <a href="mailto:macroeconomicframeworks@treasury.govt.nz" target="_blank">an e-mail address</a> at the site if you want to get involved.</div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com1tag:blogger.com,1999:blog-7342528022617501525.post-12626505067250573932021-05-26T15:29:00.000+12:002021-05-26T15:29:33.550+12:00The Bank and the markets are on the same page<p>First thing you notice about today's Monetary Policy Statement?</p><p>Well, maybe the second thing, after the wholly expected news that the official cash rate or OCR will be staying where it is for quite a while yet, as (for example) all 13 folks surveyed on <a href="https://www.finder.com/nz/rbnz-cash-rate" target="_blank">the Finder OCR preview page</a> had anticipated.</p><p>The possibility of an OCR cut is now remote. The February Statement had said, "The Committee agreed that it remains prepared to provide additional monetary stimulus if necessary and noted that the operational work to enable the OCR to be taken negative if required is now completed". The April Review had said, "The Committee agreed that it was prepared to lower the OCR if required". And in this one? Any cut to the OCR has been taken out the back and quietly buried. Which makes complete sense: the futures market has already moved on and has been signalling no further cuts for a while now.</p><p>We're back to the good old days when the Bank published a projection for the OCR, rather than the notional "unconstrained OCR" construct it had been running with in recent Statements. And here it is.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXxyaSqZSPdhyPDX5CFb5l4MycKhz0aW-XuDUQ74lS6KzgdLOBTlBoNDcn3RRLIKWxVgQZZkmAqnuBBhp8CJRCSYVoUCEyQ_mzUTblWaYgYqJLnpoES44FI8gawzsTAB99lc7fyVoPP-g/s713/mps+may+21+ocr.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="484" data-original-width="713" height="434" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiXxyaSqZSPdhyPDX5CFb5l4MycKhz0aW-XuDUQ74lS6KzgdLOBTlBoNDcn3RRLIKWxVgQZZkmAqnuBBhp8CJRCSYVoUCEyQ_mzUTblWaYgYqJLnpoES44FI8gawzsTAB99lc7fyVoPP-g/w640-h434/mps+may+21+ocr.jpg" width="640" /></a></div><p>As the Bank says (p17), "This projection is <i>conditional</i>, in that it communicates the policy path required to meet our monetary policy objectives subject to the economic outlook and the assumed impacts of other monetary policy tools", and it is not "forward guidance", or the Bank's formally tipping its hand about likely future moves, and if the outlook changes the projected OCR path will, too. But all that said, it's the best take we've currently got on what the Bank is likely to do next. It also agrees with what the markets were expecting, which was an OCR hike of 0.25% around the middle of next year and another one by the end of 2022..</p><p>On the Really Big Question that is bothering central banks right now - are current signs of inflationary pressure a signal of permanently higher inflation down the track, or will they go away as (eg) Covid effects wither away? - the Bank has come down largely on the temporary side: </p><blockquote><p>"The Committee discussed the risk that these one-off upward price pressures may promote a rise in more general inflation and inflation expectations. However, the Committee agreed that these risks to medium term inflation were mitigated by ongoing global spare capacity and well anchored inflation expectations" (p3), and</p></blockquote><blockquote><p>"we expect the broader impact on consumer price inflation to be moderate and temporary. Our projection assumes that goods supply-chain bottlenecks begin to ease in late 2021, and dissipate gradually over 2022. There are already tentative signs that the strong global demand for goods is abating, as easing of public health restrictions abroad is lifting demand for services such as eating out and travel. In addition, we expect labour shortages will lessen as border restrictions ease and more workers are able to come into New Zealand" (p28)</p></blockquote><p>though if the Bank's wrong it will have to do something about it, or as it put it (p19), "there is some risk that the change in prices is more persistent and leads to ongoing inflationary pressure. Consistent with the [Monetary Policy] Remit, the MPC [Monetary Policy Committee] would be expected to respond to ongoing inflationary pressure if it were perceived as being inconsistent with the inflation target".</p><p>One bit of good news in the Statement is that while we are not in completely calm waters yet, some of the extreme risks around the economic outlook have dissipated: "Confidence in the outlook is rising as the more extreme negative health scenarios wane given the vaccination progress globally. We remain cautious however, given ongoing virus-related restrictions in activity, the sectoral unevenness of economic recovery, and the weak level of business investment" (p2). </p><p>On Covid, the Bank is operating on the basis that "New Zealand is assumed to remain at Alert Level 1 or a lower level of restrictions over the projection ... Border restrictions are expected to begin to ease more broadly from the beginning of 2022. The majority of New Zealand’s adult population is assumed to be fully vaccinated by the end of 2021" (p34).</p>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0tag:blogger.com,1999:blog-7342528022617501525.post-59604692644585320312021-05-20T15:27:00.002+12:002021-05-22T13:01:06.239+12:00Cyclical course-setting? Pretty good<p>Does the Budget set a sustainable course? Is it appropriately boosting or braking the economy? Short answer to both: yes.</p><p>Here's the 'true' or 'underlying' state of the Government's finances (from pp34-35 of today's <i>Budget Economic and Fiscal Update</i>) which uses the methodology <a href="http://economicsnz.blogspot.com/2021/05/a-practice-run.html" target="_blank">I talked about</a> the other day. The solid blue line shows the headline deficit, and the green line shows the underlying position when the headline figure is adjusted for the state of the economy. The thing to keep a watch on is the track of the underlying cyclically-adjusted balance, and from a sustainability point of view it is tracking as it should. It's gradually moving back towards balance, which is a good thing to do over the longer haul, but not disruptively quickly, which is the right thing to do in the still-unsettled short term.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiudNIkE_bBc8JV9TV3XlZ4n2pb31C55U_wCaaRlgHVGdHBi-kvG13P0DagtFaPwQbgpQQqzcOXy1_iq7ECr9_lqz9hZ4MFKQwF4vfAhTwmOwnpMgEvrkdQ3BcpANiH1DZsuTl-oCFvU98/s649/cab.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="549" data-original-width="649" height="542" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiudNIkE_bBc8JV9TV3XlZ4n2pb31C55U_wCaaRlgHVGdHBi-kvG13P0DagtFaPwQbgpQQqzcOXy1_iq7ECr9_lqz9hZ4MFKQwF4vfAhTwmOwnpMgEvrkdQ3BcpANiH1DZsuTl-oCFvU98/w640-h542/cab.jpg" width="640" /></a></div><div><br /></div><div>The government is running ongoing deficits (cyclical and structural), so over the forecast period it is supportive all the way (it's adding more to the economy than it's taking out). But it's also useful to look at whether it's becoming more supportive, or less. That's estimated by the 'fiscal impulse', the change in the underlying cyclically-adjusted position from one year to the next (shown below).</div><br /><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKXAj6_qxR7rbsL88jzbAfakevM_AO53nmMD44GQYLNbFOEfH9pMYhyphenhyphengYfqgSQ6gBopHzSKbm3zoc_HuA9hQvHX_e4zzxqVamqF51gtk0mqmzPcJhrLe3RBET-prO_b9Ica2O4Dei7B5U/s645/fi.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="563" data-original-width="645" height="558" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKXAj6_qxR7rbsL88jzbAfakevM_AO53nmMD44GQYLNbFOEfH9pMYhyphenhyphengYfqgSQ6gBopHzSKbm3zoc_HuA9hQvHX_e4zzxqVamqF51gtk0mqmzPcJhrLe3RBET-prO_b9Ica2O4Dei7B5U/w640-h558/fi.jpg" width="640" /></a></div><div><br /></div>This looks pretty reasonable, too. There was an appropriately huge increase in fiscal support in the June '20 year, to the tune of just over 6% of GDP. The degree of support is being eased back a bit in the current June '21 year, and that makes sense, as the Covid downturn wasn't as bad or as long as expected, and the rebound has been faster and stronger than first thought. <div><br /></div><div>You could make a case that the forecast increase in fiscal support in the June '22 year isn't necessary from a cyclical point of view: we're looking at a period of expected GDP growth of 2.9% (current '20-'21 year), 3.2% ('21-'22), and 4.4% ('22-'23) which doesn't add up to the strongest case for revving up the degree of fiscal stimulus. </div><div><br /></div><div>On the other hand, the unemployment rate at June '22 is expected to be 5.0%, and there is an argument (explicitly made by the Aussie Treasurer Josh Frydenberg in his Budget earlier this month) that you should keep the fiscal pedal to the metal until the unemployment rate has a 4 at the front. So no biggie either way, and at least the years beyond '21-'22 show an appropriate ongoing unwinding of the Covid-era fiscal stance.</div><div><br /></div><div>In terms of setting the best fiscal course, on the left lay the lure of buying everything in the toyshop, on the right an "I'm more fiscally responsible than you" austerely fast return to surplus. This Budget has steered pretty well through those extremes.</div>Donal Curtinhttp://www.blogger.com/profile/03687495556590450225noreply@blogger.com0