KEY POINTS:
In this far-from-normal economic environment, businesses around the world are struggling to stay afloat. Desperate times are prompting desperate recourses, and in some cases standard procedures are being set aside. One such area is the application of competition law. Some regulators, at the behest of governments keen to offer succour to the corporate sector, are relaxing the standards that usually apply to mergers and acquisitions.
Unsurprisingly, perhaps, some New Zealand businesses are now looking for a similar loosening of regulation. Their target is the Commerce Commission and its chairwoman, Paula Rebstock.
Added fuel for this campaign has come from the election of a business-friendly Government. Last week, Commerce Minister Simon Power reinforced its ardour when he said that he was "casting a fresh eye" on the competition watchdog. That was hardly encouraging for the consumer, the ultimate beneficiary of the commission's work. Nor did it suggest a realistic appraisal of the business environment. While Fisher & Paykel's woes have highlighted the stresses under which New Zealand business is working, there is not yet evidence of the dire straits that have led to the bypassing of normal strictures overseas. The Commerce Commission itself expects an increase in firms applying for clearance to merge under the failing-company argument. But the time for granting special dispensations has not arrived.
In reality, however, this is as much an issue of ongoing ideological friction as circumstance. Telecom, for example, has been at loggerheads with the watchdog for most of the time since the early 1990s when the commission went on the front foot to denounce the company's de facto control of telecommunications regulation. It may not be coincidental that a spur for this campaign has come from a report by competition lawyer Grant David, who went so far as to call for the commission's disbanding. He says he wrote the piece in a private capacity, but he also works for Telecom's law firm, Chapman Tripp. Nor may it be coincidental that Telecom is vying to be the dominant player in the Government's $1.5 billion broadband scheme. Such a partnership would inevitably raise competition concerns.
Those seeking to defang the commission know its powers are far from extraordinary in a global context. Indeed, even if they succeeded, they would find many of their transtasman ambitions quashed by the Australian Competition and Consumer Commission. In terms of upholding the public benefit, it is far more ferocious than its local counterpart, as Air New Zealand discovered when it sought various relationships with Qantas.
Probably the reverse should apply, given the small size of this economy. Equally, the criticism of Paula Rebstock is unwarranted. If anything, it speaks volumes of her strong leadership and raising of the watchdog's profile.
To say current competition law is a luxury that New Zealand cannot afford, as Mr David seems to, is to ignore the benefits that consumers have derived from it, whether in lower prices or better product quality. They would be the losers if the commission's power was diluted. Dominant players in a market would be the winners. Life would also be easier for those who, in tough times, resort to the likes of price-fixing.
If conditions deteriorate badly, there may just be a case for temporarily relaxing some elements of competition law to help the corporate sector. But for now, the emphasis should be on a strong commission that is able to respond quickly, knowing that businesses are operating under heightened pressure. Hopefully, there will be no need to change that priority.
