Consumer champion or paper tiger?
Mark Berry and his wife have just upgraded their teenaged cars for new models. After carefully weighing up plug versus pump, the Berrys decided against an electric vehicle.
But a decade from now Berry sees many more EV owners on our roads. Petrol stations will begin to close, the market will be disrupted, he predicts.
As Commerce Commission boss, it is a market he is about to put under close scrutiny.
The retail fuel market will be the first market study undertaken under new powers just granted to the commission.
Overseas competition champions have long had those powers – and Berry says it was overdue here. ‘‘There are occasions when we have looked at something and thought: there is something not right here, this market is not working – but we are going to close the file because we don’t have an action that we can take,’’ he says.
The watchdog will deliver a first draft of its report in August. By then Berry will have gone – he is stepping down in May, after 10 years as chair.
Born in Invercargill, the son of a radio journalist, Berry spent much of his childhood in Dunedin. He studied law at Otago University, returning later to teach. After a spell at a prominent firm, he left to study at the Ivy League Columbia Law School.
A spell in Melbourne in the mid-80s got him up to speed on Australian’s competition laws. New Zealand adopted a similar regime – the Commerce Act in 1986.
As a barrister, Berry was involved in the initial application by oil companies to jointly sell gas from Taranaki’s Pohokura field – a decision that came before the Commerce Commission.
He also did regulatory work for the Orion electricity distribution networks in Canterbury.
When Paula Rebstock stepped down as Commerce Commission chairwoman in 2009, Berry took over. He previously served as deputy chair between 1999 and 2001, when it was asked to rule on the dairy co-operative merger which established Fonterra.
‘‘It did all happen fairly quickly, I have to say,’’ Berry says of the top job. ‘‘I didn’t give it a great deal of thought . . . it is a really challenging and interesting place to be.’’
The commission enforces the laws around competition, fair trading and consumer credit contracts (like mortgages, personal loans or overdrafts). It also regulates electricity lines, gas pipelines, airports, telecommunications and dairy sectors – where competition can be limited.
When Berry arrived, the commission was immersed in implementing the regulation of lines businesses, natural gas services and airports. The aim was to ensure they do not generate excessive returns from their monopoly activities.
The commission was challenged in the courts – a litigation battle that lasted three years and pitted it against dozens of lawyers hired by Auckland, Wellington and Christchurch airports, Air New Zealand, PowerCo, Transpower and Vector.
‘‘The first five years here were really dominated by that,’’ Berry recalls. ‘‘You are talking big numbers and that is dollars for the everyday consumer.
‘‘The electricity companies alone were seeking to increase the value of their assets by $2 billion – we prevailed in total in that case. If we hadn’t, electricity bills would be higher as a result.’’
Staff had just 12 months to finish the complex task of assessing the cost of capital and valuation of assets. So Berry’s not daunted by the 12-month timeframe set for the fuel investigation – despite previously warning it could put pressure on the organisation.
‘‘People were working at 11pm at night, to the early hours of the morning to meet deadlines. Those are the pressures that staff have to face from time to time. We are well versed in doing major projects to very tight timelines.’’
Some believe the Government has already made up its mind that motorists are being ‘‘fleeced’’ – Prime Minister Jacinda Ardern’s term – on fuel prices.
‘‘I’d have to say in my 10 years here we have never been on the end of any kind of political interference or persuasion,’’ Berry says. ‘‘Our independence is properly and truly respected. We are an independent, quasi-judicial body. We act with complete independence and objectivity . . . we won’t be swayed by any kind of external comments.’’
The expanded powers have heightened public expectation about future probes. The supermarket duopoly, regional airfares, and the banking sector have all been mooted as potential targets. Don’t hold your breath.
‘‘The reality is we have got funding for one market study – $1.5m, which over 12 months will adequately resource a thorough market study,’’ Berry says. ‘‘The public may have a hope that we will identify issues, and that our studies will result in goods being priced more competitively . . . It is not going to be just that easy.
‘‘Each of these market studies will be complex and till you have done them you don’t know what the outcome will be or if there is any kind of resolution to the problems.’’
He does single out the construction sector. ‘‘The one that has probably had the most call for it is the cost of building materials . . . it would have to be a very targeted part of that industry.’’
He’s also got concerns about airport profits. While the watchdog can review profit expectations, it has no teeth to curb price gouging. ‘‘We do, from time to time, look into the conduct of various ports and airport authorities and, because they are so small, the costs outweigh the benefits of really looking into it closely.
‘‘But it is a New Zealand Inc issue and might be something that could be thought about for a market study.’’
Recently, the commission has repeatedly hit the headlines for knocking back large corporate deals. It declined mergers between Sky TV and Vodafone, media companies Stuff and NZME, insurance companies Suncorp and Tower, and auction company Trade Me’s takeover of Motorcentral.
The monopoly watchdog has attracted a sizeable amount of criticism. Berry, who has former Fair Go presenter Gordon Harcourt as his media adviser, is untroubled. ‘‘We are often accused by parties who are dissatisfied with outcomes. It’s not an unnatural thing for them to say that we don’t understand their business – that comes with the territory – but there is always two sides to these cases. You’ll speak to others in business who are very happy with the decision. We are stuck in the middle of it.
‘‘If you take the Vodafone-Sky case . . . Spark was an active opponent and I expect they thought we understood the market well.’’
He believes the insurance decision was a win for consumers. ‘‘If we had allowed that merger to go through then for insurance of contents, cars, you would only have had the choice of two insurance companies. By keeping Tower there as an independent competitor, it is good for consumers in the long term.’’
The commission is now going after truck shops that sell door to door in New Zealand’s poorest communities, charging high prices, and default fees for missed or cancelled payments.
‘‘We are often accused by parties who are dissatisfied with outcomes . . . but there is always two sides to these cases.’’
Berry is as level and measured as any powerful lawyer. He doesn’t emote or show frustration. But he does show a rare flash of displeasure for those who prey on vulnerable communities, such as South Auckland.
‘‘We are relentlessly pursuing the truck shops, standing up for people who have the basic necessities of life repossessed, like heaters and other things, which lawfully cannot be done.
‘‘We are really taking steps to enforce responsible lending laws to stand up for consumer rights where people are in the debt spiral. They are led into excessively high oppressive loans for everyday goods.’’
Dodgy online retailers are also in the commission’s sights. And after a deluge of complaints, it’s also sueing Switzerland-based ticket resale website Viagogo.
When he packs up his desk in May, will Berry leave the New Zealand economy a fairer place?
‘‘New Zealand is always is going to have the problem of being remote and small. Our scales of production are small, and much of the competition is driven by import competition, and who is taking margins where, in terms of imported goods, may often explain the price differential.
‘‘Those factors do function in the way that goods are priced and what we as New Zealand consumers face.’’