Lawyers back competition move

New Zealand’s competition watchdog could be freed to investigate industries where it suspects market abuse, without needing political approval.

Days after the Australian Government caved to public pressure for an inquiry into that country’s banking sector, Commerce Minister Kris Faafoi said he wanted to ‘‘take the politics out’’ of decision making on inquiries.

In June, the former National Government proposed giving the Commerce Commission powers to conduct market studies without needing evidence of collusion, as efforts to investigate the petrol market were frustrated by a lack of co-operation by Mobil and Gull.

However, National’s response retained considerable power within the Government: Studies would only go ahead upon direction from the Commerce Minister.

Commerce Minister Kris Faafoi indicated the new Labour-led Government intended to cede decisionmaking power on what studies to undertake to the regulator.

‘‘We’re quite keen to give the Commerce Commission the power to self-initiate … If the Commerce Commission believes there’s a public interest in looking into a specific market, then we should take the politics out and let them do it,’’ Faafoi said.

Competition lawyers welcomed the move.

Michael Wigley, principal at Wigley & Co, said requiring ministerial approval added a political element to something that should be done by an independent regulator.

‘‘The commission is well placed to make a decision as to whether a particular area needs a market review and they can make an independent assessment,’’ he said.

‘‘They’re in this area day in, day out, so they see what’s going on. Sure, they’re going to get lobbied and they’ll have submissions made to them and so on, but it will still be a better and independent process.’’

Matt Sumpter, a partner at Chapman Tripp, said having ministers make the decisions could have meant market studies were done for political, rather than economic, reasons.

While the move was ‘‘desirable’’, Sumpter said it was essential that the commission was given funding to conduct the studies ‘‘as opposed to going cap in hand’’ to the minister for funding each time it wanted to undertake one.

Sumpter estimated each study would cost about $1 million.

‘‘It’s one thing to say, ‘You can be self-starters,’ but unless they’re given sufficient budget, it’s meaningless. They’ll need a top up.’’

Faafoi also indicated the new Government wanted to expedite the process to give the commission the powers to undertake the studies, after being informed that passing the required legislation could take 18 months.

‘‘We’d be quite keen to do that before Christmas next year. We hope to speed that up to get [the commission] that [market study] tool as soon as we can,’’ he said.

The would give the commission the powers from the start of 2019, Faafoi said. He declined to name any markets he believed could be worthy of a probe.

Z Energy chief executive Mike Bennetts has said the company would welcome a study by the commission, saying it would do a better job than the one commissioned by the Ministry of Business, Innovation and Employment.

In November, Energy Minister Megan Woods said a probe into fuel margins by the commission was a ‘‘live option’’.