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• Competition Policy

• Commerce Act Pts 4/4A/5 Review

• Authorisation and Clearance

• Cabinet Paper
• RIS/BCCS
• Submissions
• Discussion Document
• Terms of Reference

The issue

196. The authorisation provisions would not be operating in a fully effective manner if some types of benefits to the economy could not be considered or given a sufficient weight under the public benefit test. It has been suggested to us that it would be useful to test with stakeholders whether international competitiveness claims are being given proper consideration. This issue can be crucial for small countries like New Zealand because the benefits of obtaining minimum efficient scale may be a crucial factor in determining whether New Zealand companies can participate in some industries. Those benefits need to be weighed against the costs to the economy associated with the possible loss of competition domestically. Like the benefits associated with achieving scale in a small economy, the risks of entrenching a monopoly for a longer period of time are also greater in a small economy because new entry is less likely.

Option

197. If there is a problem, a possible solution would be to add a provision similar to section 90(9A) of the Australian Trade Practices Act which explicitly requires the ACCC to have regard to the following as public benefits:

• A significant increase in the real value of exports;
• A significant substitution of domestic products for imported goods; and
• All other matters that relate to the international competitiveness of any Australian industry.

Analysis

198. An argument for inserting such a provision in the Act is that it should be as clear as possible that mergers which are likely to increase New Zealand's international competitiveness should be treated favourably. A contrary argument is that no specific types of benefit should be singled out for special attention. There is a risk that identifying particular types of benefits may encourage the Commission and courts to conclude that a dollar of benefit to the economy arising from those sources should be weighted more highly than a dollar of benefit from other sources.

Conclusion

199. The main issue to consider is whether international competitiveness arguments can be and are being properly considered by the Commission under the public benefit framework provided by the authorisation provisions in the Act. We are seeking submissions on this matter.