Issue M: A Possible Specialist Competition Tribunal
Background
172. The application of competition law can involve complex analysis often based on economic concepts which are subject to considerable debate between experts. The degree of specialist expertise required explains why the Act allows the Court to sit with one or more expert lay members in some types of cases. The statutory provisions relating to the cases and whether lay members take part fall into three categories:
- At least one lay member is required if the case is an appeal against a restrictive trade practices authorisation decision or a merger clearance or authorisation decision by the Commission;53
- The judge has the discretion to appoint one or more lay members in cases involving alleged contraventions of the substantive prohibitions in Parts 2 and 3; and
- Lay members may not participate in cases involving procedure, orders that are not opposed, where the parties agree that the matter should be heard by a judge alone, proceedings where the issue is substantially a question of law only and when the Court is deciding whether to allow an appeal to the Court of Appeal.
173. The lay member concept is unusual in competition law jurisdictions. This option is not available in Australia and some other jurisdictions for constitutional reasons. Australia has, instead, established a specialist tribunal, the Australian Competition Tribunal. Some other countries also have specialist competition tribunals.
The issue and option
1742. The issue to consider is whether the lay member approach works sufficiently well, or whether a specialist tribunal could provide higher quality outcomes in a cost effective manner.
175. A low cost way of establishing a tribunal would be to limit the hearing of Commerce Act cases to a small pool of High Court Judges (along with lay members) who have experience in the area. The tribunal would effectively operate in the same way as the High Court in all other respects. The tribunal would consider all cases that are or would otherwise become the responsibility of the High Court due to other changes that may be implemented as a result of this review. As is the case with the High Court at present, appeals against decisions of the tribunal would be considered by the Court of Appeal.
Analysis
Quality of outcomes
176. There would be no point in establishing a specialist tribunal unless there were good reasons to expect that it would lead to a noticeable improvement in the quality of decisions. We have not received any information to date to suggest the current approach fails to adequately deal with the complexity of cases brought before the Court. Hence there is no apparent need for change should the range of cases that can come before the Court remain unchanged or be modified in a minor way only.
177. However, this issue needs to be considered in the context of possible changes that could arise from the other half of this review of the Act (i.e. the Review of Parts 4 and 4A). At present, the Commission's regulatory control decisions made under section 70 can only be appealed on matters of law. In the discussion document we released on Parts 4 and 4A in April 2007, we canvassed the possibility of introducing merits review of regulatory control decisions made by the Commission.54 We stated that a specialist tribunal may be more appropriate.55
178. From the appellant body's perspective merger and trade practice cases are likely to be less complex because they are usually yes/no decisions. The appellant body will need to decide whether to uphold or reverse the decision made by the Commission. By contrast, merits review of decisions made under section 70 will require the appellant body to determine the position that a controlled firm shall be placed on a spectrum of almost infinite possibilities. The appellant body might need to consider such things as the firm's weighted average cost of capital, how to allocate common costs, product and service quality standards and how to split efficiency gains between the regulated firm and the consumer. In our view there are stronger arguments for a specialist tribunal from a quality of outcomes perspective if merits review of the Commission's regulatory control decisions were to be allowed.
Cost effectiveness
179. The fixed cost of having additional bodies is proportionately higher in small countries like New Zealand. There are only a small number of Commerce Act court cases each year and it may not be cost effective to establish a specialist tribunal even if merits review of section 70 decisions were to be allowed. However, the cost in this case would be minimised because the tribunal would be the High Court with a minimum of modifications.
Timeliness
180. A tribunal comprising a small pool of judges could lead to delays in hearing cases. Other commitments may mean that no judge would be available to hear a case in a timely fashion. This could be particularly unfortunate for appeals against merger decisions, because time is often of the essence. There also may be occasions when the tribunal is fully committed to other cases.
Consistent legislation
181. The general principle applied by the Ministry of Justice is that there must be compelling reasons to depart from the general court system. This policy is aimed at avoiding having a fragmented, complex and costly judicial system. We consider that this test would not be met if the range of matters heard by judges and lay members together were to remain unchanged. The case would be stronger if merits review of regulatory control decisions were to be introduced. However, it is unclear whether the "compelling reasons" test would be met.
Conclusion
182. Our preliminary view is that there is no case for creating a specialist tribunal if the scope of appeals were to remain unchanged. The arguments would be better if there were to be a broadened right of appeal in relation to regulatory control decisions made by the Commission under sections 70-74. However, it is not clear whether those arguments would be strong enough.
Question
Q23. Do you consider that a specialist competition tribunal should be established? Does your answer depend on whether there is to be appeals on the merit against regulatory control decisions by the Commerce Commission?
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