Issues O to S: The Framework for Assessing Costs and Benefits
186. Competition law is underpinned by the presumption that economic efficiency will be promoted if competition is workable or effective. However, occasionally this may not be true. The public benefit test allows a merger or practice to be approved even if it would otherwise contravene Part 2 or 3 of the Act. Although the Act leaves open the possibility of considering anything that is of value to New Zealand society, it is well established that the public benefit test is primarily an efficiency exception. That exception allows the presumption that competition is a good proxy for efficiency to be overturned based on an analysis of the circumstances relating to the application in question.
187. The statutory framework for considering applications for clearance and authorisation applications is as follows:
- Merger Clearances – Under section 66(3), the Commission is required to assess whether the proposed merger will or is likely to substantially lessen competition; and
- Merger Authorisations – Under section 67(3), the Commission is required to carry out the same analysis as for merger clearances. If it concludes that the merger is likely to substantially lessen competition then it must assess whether the merger will result or be likely to result in a benefit to the public such that it should be permitted.
- Restrictive Trade Practice Authorisations – Under section 61(6)-(8), the Commission is required to apply the public benefit test discussed in relation to merger authorisation applications.56
188. Part 5 broadly empowers the Commission to carry out these roles. It does not specify analytical techniques and keeps the prescription of processes to a minimum. Five issues have been brought to our attention about the frameworks used by the Commission for assessing costs and benefits. These issues are discussed below.
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