So, one might have hoped that a targeted review of the Commerce Act would aim at the big problems blocking open and competitive markets.
The Commerce Act already addresses a lot of potential barriers to competition. Cartel activity is forbidden, mergers are regulated, and trade practices that are considered anticompetitive are restricted.
A targeted review might aim at what the Commerce Act has missed: The major, obvious problems that have emerged where the Commerce Commission has not been able to do much because the Act has not enabled appropriate action.
A series of market studies have pointed to land use planning as an impediment to workable competition.
Zoning can unintentionally create local monopoly power by blocking new entrants.
And while your competitor’s submission opposing your resource consent is supposed to be ignored by planners, plenty of other anticompetitive options are available. For example, if you want McDonald’s as your tenant, oppose their application to open on a site they own – as happened in Wanaka recently.
But the problem is broader than zoning. Plenty of other regulatory systems also have sharply anticompetitive effects. If you wanted to create an actual cartel of pharmacies, you would have a hard time doing better than the rules already in place around opening new pharmacies.
While it is illegal for occupational licensing boards to deliberately promote anticompetitive practices, investigation and enforcement action are rare. For decades, it has seemed that no one is watching.
There are obvious things that a targeted review of the Act should be targeting.
For example, Part Two of the Act lists a series of restricted anticompetitive trade practices. Why not add anticompetitive use of a regulatory process to that list?
The Act could also enable the Commerce Commission to determine whether a regulatory regime substantially lessens competition – a legal test used elsewhere in competition law. That determination could trigger a review of the regulation.
It could be that there is no way of achieving an important public benefit without that reduction in competition. But it would be a good idea to check.
Unfortunately, none of that was in the targeted review. Instead, the review targeted minor issues.
If the government believes that strengthening competition matters for economic growth, the targeted review has missed its shot.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
A targeted review might aim at what the Commerce Act has missed: The major, obvious problems that have emerged where the Commerce Commission has not been able to do much because the Act has not enabled appropriate action.
A series of market studies have pointed to land use planning as an impediment to workable competition.
Zoning can unintentionally create local monopoly power by blocking new entrants.
And while your competitor’s submission opposing your resource consent is supposed to be ignored by planners, plenty of other anticompetitive options are available. For example, if you want McDonald’s as your tenant, oppose their application to open on a site they own – as happened in Wanaka recently.
But the problem is broader than zoning. Plenty of other regulatory systems also have sharply anticompetitive effects. If you wanted to create an actual cartel of pharmacies, you would have a hard time doing better than the rules already in place around opening new pharmacies.
While it is illegal for occupational licensing boards to deliberately promote anticompetitive practices, investigation and enforcement action are rare. For decades, it has seemed that no one is watching.
There are obvious things that a targeted review of the Act should be targeting.
For example, Part Two of the Act lists a series of restricted anticompetitive trade practices. Why not add anticompetitive use of a regulatory process to that list?
The Act could also enable the Commerce Commission to determine whether a regulatory regime substantially lessens competition – a legal test used elsewhere in competition law. That determination could trigger a review of the regulation.
It could be that there is no way of achieving an important public benefit without that reduction in competition. But it would be a good idea to check.
Unfortunately, none of that was in the targeted review. Instead, the review targeted minor issues.
If the government believes that strengthening competition matters for economic growth, the targeted review has missed its shot.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
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