Chapter 13: Next Steps
245. The overall objective of the review of regulatory provisions is to ensure that economic regulation in New Zealand is consistent with providing for the long-term benefit of consumers within New Zealand.
246. This document identifies potential issues with the currently regulatory provisions under the Commerce Act 1986 and outlines potential amendments to these provisions.
247. Your feedback is sought on the material presented throughout the document. Specific questions have been posed at the end of most Chapters and are consolidated below for easy reference.
248. Feedback is also welcomed on any other aspect of the document. See: information on how to make a submission.
Questions for submitters
Chapter 1: Introduction
Q1. Do you have any comments on the desirable characteristics of a regulatory regime as outlined in this Chapter?
Chapter 3: Potential issues with the current regime
Q1. Does the above list capture the main issues with the current regulatory regime?
Q2. Are these issues adequately identified and described?
Q3. Are there are any other issues with the current regime that are not listed above and should be considered as part of this review?
Chapter 4: Objectives of economic regulation
Q1. Do you agree that a regulatory regime needs to be available to address issues in markets with monopoly characteristics?
Q2. Do you consider that the sole or primary objective of a regulatory regime should be economic efficiency or consumer protection (distribution), or do you consider that both should be taken into account?
Chapter 5: Purpose statement
Q1. In your opinion, is a regulatory-specific purpose statement desirable?
Q2. If so, do you agree with the proposed regulatory-specific purpose statement, or do you prefer an alternative formulation? If so, please suggest specific wording.
Chapter 6: The decision on whether to impose regulation
Q1. Do you agree with the proposed criteria for deciding on whether regulation may be imposed?
Q2. If you agree that one of the tests for whether control may be imposed should be where the long term benefits to acquirers exceed direct and indirect costs, do you consider that such benefits should (a) "substantially" or (b) "clearly" exceed costs, or should there be some other guidance on weighting?
Q3. If you agree that one of the tests for whether control may be imposed should be where the long term benefits to acquirers exceed direct and indirect costs, should those benefits be considered regardless of whether acquirers acquire the goods and services directly or indirectly, or should it be necessary to establish that benefits will be passed on to end users (or consumers or end-acquirers)?
Q4. Should the current provisions in the Act allowing control to be imposed in the interests of suppliers (to a monopsonist) be retained?
Q5. Do you agree that there should not be a legislative test for when regulation should be imposed?
Q6. Do you agree that the Minister should remain the decision-maker on whether control should be imposed under Part 4, but that that the Minister must receive a report and recommendation from the Commerce Commission before making a decision?
Q7 Do you agree that the decisions on whether and, if so, how to regulate should be undertaken simultaneously rather than sequentially?
Chapter 7: Types of economic regulation
Q1. Do you agree that it is desirable to widen the scope of the Commerce Act by providing for regulatory options other than control, specifically:
- negotiation/arbitration and
- price monitoring/information disclosure?
Q2. Do you consider that specific, easier tests should be provided to determine whether lighter-handed types of regulation, such as information disclosure, may be imposed, such as:
- meeting the competition criteria only
- requiring qualitative (rather than quantitative) cost-benefit analysis?
Chapter 8: Key input decisions
Q1. Do you see value in having key input decisions set as a stand-alone process in advance of an inquiry and recommendation to regulate? If so, should they be set for a specific sector once an inquiry has been initiated, or set generically irrespective of whether or not an inquiry has been initiated?
Q2. Is it practical, or possible, to set generic methodologies that could apply to all potentially regulated sectors?
Q3. Do you consider that input methodologies should be set:
- as guidelines by the Commerce Commission;
- as Rules by the Minister following a recommendation from the Commission; or
- another option (please specify)?
Chapter 9: Regulatory control design issues
Q1. Should specific provision be made (e.g. in Part 5) to allow the Commerce Commission to use comparative benchmarking as a methodology for setting control terms?
Q2. Should specific provision be made to allow the Minister to request at the Commission to consider whether economic regulation may be imposed on a sector as a whole (rather than each individual firm within a sector) and if so, should provision be made for cost benefit analysis on this matter to be undertaken in qualitative (rather than quantitative) terms?
Q3. Is there value in allowing firms to propose their own control terms for the Commission's consideration ("propose/respond" model)?
Q4. If firms are able to propose their own control terms, should the Commission be required to accept proposals that meet pre-set criteria? Do you have any comment on the proposed "reasonableness criteria"?
Q5. If firms have the ability to propose their own control terms, should this proposal take place before or after declaration of control by the Minister (note that in section 9.3 the paper proposes different sequences for control of individual firms compared to sector control)?
Chapter 10: Possible packages of "how to regulate"
Q1. With regard to the Part 4A thresholds regime do you favour:
- retaining the threshold regime and making it more generic (that is, applicable to sectors other than electricity lines businesses), or
- repealing Part 4A and amending Part 5 to allow the Commerce Commission to use comparative benchmarking to set terms and conditions for control while allowing firms to seek customised control terms.
Q2. In your opinion, are there other options for addressing the issues with the Part 4A thresholds regime?
Q3. Are small businesses within a sector likely to be disproportionately affected by the requirements of the regulatory regimes proposed in this document? What are the likely incremental costs of complying with the current Part 4A and proposed alternative regimes? How could these costs be minimised?
Q4. Should local community owned trusts be subject to a different regulatory regime than larger non-trust electricity lines businesses?
Chapter 11: Processes for amending and enforcing control terms
Q1. Do you agree that control terms should not be re-opened within a specified control period, other than under exceptional circumstances? If so, do you agree with the exceptional circumstances suggested in this Chapter?
Q2. Are the current provisions relating to penalties in the Act for breaches of control terms (s70C) satisfactory or should additional guidance be provided?
Chapter 12: Accountability mechanisms
Q1. Do you consider that it is desirable to provide for merits review of regulatory decisions or does judicial review provide sufficient "checks and balances" on regulatory decisions?
Q2. Do you agree with the document's conclusions that, if merits review is provided for, it should only apply to control decisions made by the Commission and be limited to the form of "appeals by way of re-hearing" where new evidence can be introduced only if it could not have been submitted at the original decision-making stage?
Q3. What is your preferred composition of any merits review body, taking into account New Zealand's small size and limited resources?
Chapter 13: Next steps
Q1. Submitters are requested to provide specific, quantified information on costs and benefits wherever possible to assist the Ministry in undertaking any cost-benefit analysis.
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