TOP tackles out ‘competition problem’
There’s widespread competition failure in New Zealand says TOP deputy leader Geoff Simmons, but neither of the two main parties are talking about it. If TOP got its way, big, largely foreign-owned businesses would face a tough rewriting of the Commerce Act, and a system of regular monitoring.
‘‘Our Commerce Act is a joke really,’’ says Simmons, an economist by training. ‘‘It is clear that the system isn’t working.’’ New Zealand has some very concentrated industries, in part thanks to the small size of the country, though there are indications some industries have hit peak concentration, with the Commerce Commission having declined Suncorp’s attempt to take over rival insurer Tower.
But the cost of living is very high, and complaints of abuse of power flood into the Commerce Commission, which revealed this week that in the 12 months to the end of June, there were 230 complaints alleging crimes against the Commerce Act, with 68 of them being allegations of ‘‘taking advantage of their market power’’.
Another 60 complaints were about entering into arrangements that substantially lessened competition, and 18 of arrangements that limited supply.
Building, petrol and retail were the industries most complained about.
But these 230 complaints, often from industry participants, turned into just three domestic investigations.
Simmons says that’s a result of our weak competition law, and we should follow Australia and the UK in rewriting it.
‘‘There’s no doubt in my mind that they are ahead of us in dealing with this issue of market power,’’ Simmons says.
TOP wants to ‘‘review’’ section 36 of the Commerce Act, which is supposed to outlaw abuse of market power, but Simmons says it has resulted in no recent prosecutions because it is so weak.
‘‘Government knows it is not being enforced but have sat on their hands.’’
‘‘What we are really talking about is a review of that clause in particular, and then we can have the arguments.’’
TOP would also introduce ‘‘regular monitoring of monopolies and oligopolies for abuse of market power’’, which Simmons says, happens overseas.
The ad hoc recent petrol price review is no way to approach monitoring market power, Simmons says, though he welcomed it because it highlighted the issue.
‘‘These companies need to know they are being watched,’’ Simmons says.
New Zealand just seems to accept a lack of competition is its fate, he believes.
‘‘We seem to have just ended up here on the basis that we are a small country, and we just have to suck it up. We think that is crazy,’’ Simmons says.
The competition ‘‘review’’ policy lacks detail, though that accusation can be levelled at many policies put forward, including some by the major parties.
TOP does not yet know what section 36 should say. Nor has it worked out who would qualify for monitoring, or who would do the monitoring, though the Ministry of Business, Innovation and Employment seems like a natural home, Simmons says.
Monitoring can quickly become regulating.
‘‘When it becomes clear that an industry is not responding to the ‘sunlight’, that naturally follows.’’
The party’s plan is to transform the economy with more competition, but also by shifting taxes of income, and onto assetowning, believing that would free innovation and reward effort.
Simmons says: ‘‘We see ourselves as quite, quite different from other parties. This isn’t left, or right. We are pro-market, but we think the market needs to be built on a different foundation where everyone gets a fair crack.’’
The party isn’t yet polling at a level to get it past the 5 per cent party vote mark that would give its MPs a voice in Parliament.