Govt to look at monopoly power rules next month; cartel criminalisation still on the agenda

The review of the monopoly power provisions in the Commerce Act.

New Zealand's government will decide next month whether to seek submissions on an issues paper on rules governing the abuse of monopoly power, while separately committing to press on with legislation criminalising cartels, which has stalled in the parliament since being introduced four years ago.

The review of the monopoly power provisions in the Commerce Act and passing the Commerce (Cartels and Other Matters) Amendment Bill into law are two specific actions the government is taking as part of the innovation chapter in the Business Growth Agenda, released this week. A new initiative adopted to "enhance competition to drive innovation (and protect consumers)" will see Cabinet next month consider the release of an issues paper seeking submissions on whether section 36 of the Commerce Act is working or if it requires amendment, the Ministry of Business, Innovation and Employment paper said.

A spokesman for Commerce Minister Paul Goldsmith said the issues paper would seek submissions from the public and other interested parties, and would probably go out in mid-November.

In April, Goldsmith told Parliament he was looking at reviewing the monopoly power provisions, which the Productivity Commission last year said needed examining as to "whether other approaches offer greater accuracy in identifying situations where firms have taken advantage of market power and damaged dynamic efficiency with consequent detriments to competition, innovation and/or productivity."

The Commerce Commission has advocated legislative reform, and stopped issuing guidelines on the provisions in 2010 after the Supreme Court ruled against it in a case against Telecom Corp, now Spark New Zealand, over the telecommunications company's dial-up internet surcharge in the 1990s.

Prior to the Productivity Commission report and its draft paper in January 2014, Labour Party MP Clayton Cosgrove filed a supplementary order paper in December 2013 seeking to amend the cartel criminalisation legislation to address the misuse of monopoly powers to let the courts "examine the actual impact on a monopolist's conduct on the level and nature of competition in a market" by focusing on effect rather than purpose, and reduce the reliance on a counterfactual test that "offers a degree of certainty to a monopolist, but is widely viewed as an overly conservative test that returns too many false negatives."

During the cartel bill's interrupted second reading in April last year, Cosgrove told Parliament the previous commerce minister, Craig Foss, rejected the proposed amendment, instead preferring to review the Commerce Act provision through the Business Growth Agenda programme.

The cartel criminalisation bill is awaiting its committee stage hearing in the House, when Cosgrove's SOP would be put to a vote, and a final reading before it's passed into law, though Goldsmith's spokesman said he couldn't guarantee it would be back before Parliament this year, because it was "subject to a pretty busy legislative agenda." The review of the abuse of monopoly powers was separate to the bill and wasn't holding it up, he said.

The cartel legislation was first tabled in October 2011, and was last before Parliament in November 2014. Since then, 141 different pieces of legislation have been debated in the House, and 101 bills have been passed into law since last year' election.

The bill was 19th on the latest Order Paper out of 35 pieces of government legislation.


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