Option Two: Further Work
30. This option would involve either (a) commissioning an independent review by a consultancy firm on whether airports are over-pricing and whether there would be net benefits in introducing further regulation (and the best type of regulation), or (b) requesting the Commerce Commission to undertake another inquiry under the Commerce Act.
31. An independent consultancy review could cost less than a Commerce Commission inquiry and be quicker but this would depend on the specification of the terms of reference. Funding would need to be appropriated.
32. A further inquiry by the Commerce Commission could take 18 months to two years and cost up to $2m. It could be started under the current Act and then transfer to the revised Act (allowing recommendations to be made on alternative forms of regulation).
33. Treasury's preferred option is to undertake an independent review of problems with and potential solutions to, the exercise of market power in airport services markets. This would be a measured response to the concerns raised during the Commerce Act review, is consistent with good regulatory process and ensures that Ministers have a sound basis of information from which to make judgements on the efficacy of the framework.
34. However, should the Government wish to take a more active response to current concerns, Treasury considers there is value in implementing enhanced information disclosure and requiring the Commerce Commission to monitor information supplied by airports, reporting on the state of markets for airport services. A record of information on market performance would usefully inform later analysis of whether there might be any need for further regulatory interventions, such as a negotiate/arbitrate regime.
35. Treasury considers that this option would satisfy policy objectives and would be a measured response to the concerns raised during the Commerce Act review.
36. We (Ministers of Commerce and Transport) consider that there is sufficient evidence that the regulatory regime needs to be strengthened, particularly with respect to the current information disclosure regime. A further study on this particular issue would be unlikely to yield materially new information and would simply postpone a decision on a well-traversed and pressing issue (particularly in the light of overseas interest in acquiring AIAL).
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