Businesses question watchdog resources

Paula Rebstock

Businesses are questioning the Commerce Commission's resourcing after frustrating and costly delays in getting decisions and reports despite a funding and staff boost.

Waikato's Open Country Cheese has been waiting 15 months for a commission decision on the company's claim that dairy giant Fonterra is overcharging it for milk transport.

Security and fencing company Gallagher Group said its application to acquire Tru Test, made in November last year and declined in late February, also took too long to determine. Deputy chief executive Steve Tucker said the company then had to wait "several months" to learn the reasons it was turned down.

"It was evident through the process they could have been more resourced, that it could have been sped up if they'd had more resources," Tucker said.

The competition watchdog made a net loss of $419,000 in the year to June 30, compared with a surplus of $476,000 the previous year.

Gallagher, a private company, has a multimillion-dollar investment in Tru Test as a 14.7 per cent shareholder, and needed to see the commission's reasons to decide what to do next, said Tucker.

Open Country director Wyatt Creech said the commission was easy to deal with, but under-resourced for what it was expected to do. He had been told a heavy workload and difficulty getting commissioners' time was why he was still waiting for a decision.

The commission, an independent, quasi-judicial government entity which operates under the Commerce Act, has six commissioners and four associate commissioners. It has 141 staff in Wellington, Christchurch and Auckland. That is 16 more staff than it had in March last year.

The Government has increased the commission's "commerce vote" funding from $7.9 million to $12.5 million a year. The commission's total 2005-06 budget is $19.7 million, according to a report for the incoming Government in October.

The watchdog could also claim another $3.3 million for major litigation costs.

The Commerce Commission's annual report for the year to June 30 said actual total operating revenue was $18.6 million. The annual plan provided for $19.1 million revenue. In 2004 total operating revenue was $17.9 million.

Total operating expenditure was $17.8 million, against the annual plan's $19.2 million and $16 million actual expenditure in 2004.

Personnel costs accounted for $11 million of expenditure. The next biggest cost was consultancy at $3.2 million. The $419,000 deficit would be absorbed by retained earnings and was mainly due to increased investigations and gas industry inquiry costs, the annual report said. The deficit was made up of the results of non-leviable business segments.

The commission would not comment on its resources or funding.

But in a statement, chairwoman Paula Rebstock said there had been a record number of merger clearance applications since July this year. The commission's website shows 15 applications since July 5, including for the PGG and Wrightson merger, and for a brand trade deal between Fonterra and Graeme Hart's Rank Group.

To date, the commission has ruled on all but four of the 15.

Rebstock said many applications raised complex issues, resulting in longer decision times.

"The Commerce Commission still makes decisions on mergers and acquisitions in a fraction of the time taken by overseas agencies, and New Zealand is the only jurisdiction where full written reasons are given for decisions."

The Australian Competition and Consumer Commission said it took up to six weeks to make determinations on "standard" mergers and up to eight weeks for more complex applications.

Rebstock said work was prioritised on the long-term benefits to consumers.

Commerce Minister Lianne Dalziel could not be reached for comment.

Creech, a former National Deputy Prime Minister, said his criticism was not directed at the commission but at the system. The policy papers for the Dairy Industry Restructuring Act 2001 raw milk regulations which the commission polices, had been written in "a fairly general way" on the understanding a quick-fire disputes resolution procedure would be offered by the commission.

Gallagher's Tucker said he had no fight with the commission's performance over Gallagher's recent successful application to acquire Greyson Gates. But he had yet to see the written report from the December 1 decision.

The commission

Role

* To stop anti-competitive behaviour.
* To protect consumers.
* To police telecommunications, electricity, gas and dairy industry laws.

People

* Six commissioners.
* 141 staff (last year 125).

Housekeeping

* 2005-6 budget - $19.7 million-plus.
* Deficit $419,000.
* Expected loss $323,000.

Funding

* Government, cost recovery, sector levies.