‘Cosy duopolies’ in regulator’s firing line
Supermarkets, petrol companies, real estate agents and power companies could be in the firing line once regulators are able to lift the lid on industries suspected of having a competition problem.
The Government announced last month that it intended to adopt a recommendation from the Organisation for Economic Cooperation and Development (OECD) and empower the Commerce Commission to undertake ‘‘market studies’’ of particular industries before there was evidence of a law breach.
Consumer NZ chief executive Sue Chetwin expected the studies would be a useful tool.
Energy Minister Judith Collins has signalled that the fuel market could be studied in the wake of a government report suggesting drivers in the South Island and Wellington were paying over the odds for petrol.
Chetwin believed the ‘‘cosy duopoly’’ in the supermarket industry, and parking and insurance, were also candidates for an early look-over.
‘‘Right now it does look like we are paying quite a bit more for our basic supermarket products.’’
There was ‘‘quite a concentration’’ in the insurance industry under IAG New Zealand, which owns the State, NZI and AMI brands, she said.
In addition, ‘‘The parking industry, I think, continues to be problematic and it is heavily dominated by one company.’’
The retail electricity market had got more competitive but there might be issues in the wholesale market and with lines companies, Chetwin said.
However, the impact of market studies could be limited by the number the commission was able to undertake.
Entrepreneur Lance Wiggs said the real estate industry and suppliers of construction materials such as concrete and gib board could be in the frame.
‘‘The wholesale market for electricity needs to have another bash. The whole thing is stitched up,’’ Wiggs said.
His ‘‘gut feeling’’ was that a couple of studies each year would be a good target.
But Torrin Crowther, a compe- tition lawyer with Bell Gully, said that without an increase in funding for the commission, he would be surprised if more than one study a year would be possible.
Ministers had been right to decide that the Government – rather than the commission itself – should dictate which industries were studied, he said.
‘‘Let’s not kid ourselves. We’re talking about reviews likely to run for 12 months or more and literally impose millions of dollars of cost on an industry,’’ Crowther said.
‘‘If we are to go down this path, businesses will at least want comfort that the decision which results in such costly reviews will be made by someone independent of the competition regulator.’’
Chetwin disagreed, believing the power to order studies should lie with the independent regulator. ‘‘I don’t think it should be a political decision.’’
Wiggs said political control meant market studies were more likely to be triggered by public opinion, including pressure from media outlets.
‘‘If they [ministers] don’t respond, it becomes a political issue and the voters will decide.’’