Commerce Commission (International Co-operation,and Fees) Bill

When I last spoke on the Commerce Commission (International Co-operation, and Fees) Bill I stated how many of our businesses in New Zealand look to expand into overseas markets. Often Australia is the first point of call. But those companies need to come to grips with the different federal and State regulations in Australia, and sometimes this can be a challenge.

The single economic market is about aligning the regulatory environment in New Zealand and Australia so that a New Zealand company doing business in Penrose or Onehunga or Panmure or Mount Wellington, or like many of the firms in Maungakiekie, can do business as easily as the companies that are in Australia. Those who will indirectly benefit from cooperation by regulators are consumers in businesses in New Zealand that are harmed by anti-competitive behaviour or unfair trading by overseas-based parties. Enhanced cooperation will increase the likelihood of detecting and successfully penalising overseas-based parties that contravene the Act. This should promote competition and fair trading in domestic markets, resulting in lower prices, a greater choice of products, and better consumer protection.

This bill reaffirms Budget 2010, which was delivered by the Hon Bill English last Thursday. It is about lifting New Zealand’s economic performance. The bill is part of a focus from the John Key - led Government on improving access to world markets for our exporters. It is about boosting innovation and improving export access to world markets, and it is one of six policy drivers for a step change in New Zealand’s economic performance. The bill is about increasing economic performance, unlike the last Labour Government. We will lift our economic performance, we will create jobs, we will boost incomes, and we will improve living standards. I commend this bill to the House.

Firstly, I would like to commend my colleague the Hon Lianne Dalziel for her work on the Commerce Commission (Co-operation, and Fees) Bill—a Labour bill—which is part of a work programme supporting the memorandum of understanding on business law coordination with Australia, as my colleague across the House has mentioned. I think it is important to acknowledge that this bill was originally a Labour bill. It is about mutual cooperation, and it has been a long time coming, with the issue first being discussed by commerce Ministers of New Zealand and Australia in 2003. The bill was initially introduced by my colleague the Hon Lianne Dalziel as Minister of Commerce on 9 September 2008. It has since been taken up by the present Minister of Commerce, Simon Power, which is a good thing.

The bill will directly benefit New Zealand businesses and consumers, and will promote open and dynamic markets, as other speakers have mentioned. I am pleased to see that the Government is progressing with this bill. It extends Labour’s work towards supporting a single economic market with Australia. It aligns us with Australia, which passed similar legislation in 2007, and also complements the Trans-Tasman Proceedings Bill, currently before the Justice and Electoral Committee, which focuses on the enforcement stage of regulation.

Specifically this bill provides for the Commerce Commission to use its statutory powers to assist overseas competition through a consumer regulator with an investigation. It also sets out how the commission can share compulsorily acquired information to assist overseas commission and consumer regulators. It also streamlines agency investigations into unfair trading practices and anti-competitive behaviour, which I think we all know is becoming increasingly important in the global marketplace. It also strengthens the commission’s ability to share information and provide investigative assistance, which will make overseas regulators more likely to help us. It is this mutual assistance that will ultimately promote the operation of a fair and effective market between the two countries, which is good for both consumers and businesses.

The bill also makes minor amendments to require the commission to make refunds where appropriate, and allow for fair exemptions for particular groups, including small businesses. Both the Commerce Commission and the Australian Competition and Consumer Commission have advised that the constraints on cooperation are impeding trans-Tasman investigations.

I note that in his speech to the House the Minister raised a couple of issues that he would like the Commerce Committee to consider, and I will reiterate those. One of them relates to whether it ought to be a requirement to have a full cooperation arrangement, Government to Government, as the basis for the sharing of information and investigative assistance with the overseas regulator. The issue is whether it is necessary for that Government to Government arrangement to be in place or to have a lesser form of arrangement that might be looked at.

The other issue is in relation to exempting classes of persons from the requirement to pay any fee prescribed for in an application. As my colleague the chair of the Commerce Committee mentioned, that was interesting because when she was the Minister for Small Business she took every opportunity to make compliance costs more manageable for the small to medium sized enterprise sector, recognising that sometimes compliance costs could be disproportionate when dealing with a smaller entity that simply did not have the economies of scale of some of the larger entities. So that meant that the idea of having an exemption by regulation written into the legislation could be a fair way of allowing for that to occur and for allowing for adjustments over time. Those two issues will be looked at by the Commerce Committee.

The Commerce Commission already has four existing cooperation agreements in place, with Australia, Canada, the United Kingdom, and Taiwan. These provide for cooperation on certain matters, including coordinating enforcement activities and exchanging non-compulsorily acquired information—that is, with the consent of the providing party. The bill acknowledges that without compulsorily acquired information being able to be shared, mutual cooperation is somewhat limited, and these existing arrangements will be likely to be amended to incorporate the new proposed powers.

The bill amends the Commerce Act 1986, the Credits Contracts and Consumer Finance Act 2003, and the Fair Trading Act 1986. Ultimately the reasons for the legislation are that the international nature of transactions and territorial limits on regulators are making it increasingly desirable for regulators to cooperate to manage competition and consumer effects of transactions on domestic markets. The Commerce Commission is currently constrained from providing investigative assistance and compulsorily acquired information that it holds to the overseas regulators. The commission’s statutory powers of compulsion can be used only in relation to enforcement and adjudication within New Zealand. So there are also legal restraints on the provision to overseas regulators of confidential, compulsorily acquired information that was already held by the commission, which in turn limits the willingness of overseas regulators to provide assistance to our Commerce Commission, as cross-jurisdictional assistance needs to be based on mutual assistance.

Most overseas regulators consider the likelihood of reciprocity as a factor in determining whether to provide assistance or information to the commissioner, and at present our Commerce Commission cannot pass on to overseas regulators any information acquired using its compulsory powers. Labour believes that this bill will ultimately enable genuine cooperation between the Commerce Commission and equivalent overseas regulators.

I commend the work that the Hon Lianne Dalziel has done on this bill, and also the current Minister of Commerce, Simon Power, for taking it forward. I look forward to its passage to the Commerce Committee.

Kia ora koutou. I have not given the Commerce Commission (International Co-operation, and Fees) Bill very close scrutiny, but it appears, on the surface, to be quite a sensible and practical response to a very real problem. In that context it is interesting to discover that it came from the former Minister of Commerce, Lianne Dalziel.

The bill clearly sets out to enhance the ability of the Commerce Commission to work more closely with the equivalent regulators overseas to share information in a bid to better police anti-competitive behaviour. Although in the greater scheme of things the Greens do not necessarily think that competition is always a desirable thing in business—we see cooperative and collaborative approaches also having significant power—clearly in this context it is to everybody’s advantage to not allow anti-competitive behaviour. That would not be in the interests of either good business practice or consumers or other stakeholders. To the extent that this bill can reduce collusion that would disadvantage the market, the stakeholders, and the consumers, then, clearly, it is a good thing.

Given the closeness of the economic relationship between New Zealand and Australia, it is clearly entirely appropriate that this bill should focus first on establishing that relationship in the context of getting some synergy, some parallel operations, between here and Australia in order to enable a higher level of cooperation between the two countries.

The bill sets out some requirements that must be met before information sharing can take place. We see these as, essentially, public interest tests. It is desirable that this assessment be done on a case-by-case basis. There is always a temptation for regulators to be a little bit open-handed, perhaps, inappropriately so on occasion, with information sharing or exchange, whether by intent or simply by poor judgment on a given occasion. Companies whose information is taken by regulators need to know that the information will be treated with the utmost confidentiality within the context of what the legislation is trying to achieve. It is critical to meet that reasonable expectation of companies.

It is proposed that quite significant powers be given to regulators. We think it is important that that comes under some fairly close scrutiny. We have had the recent example of a search and surveillance bill brought to this House that has stimulated significant and very well-founded public opposition, and opposition from the legal profession and elsewhere. It is important that the same mistake is not made with this bill. Having said that, at the moment the degree of regulation proposed seems appropriate, but that is certainly something that the select committee will want to give some very close attention to, and it will want to invite significant input into the question of whether the powers this bill will give to regulators are appropriate and no more than is sufficient to achieve the purpose of the bill.

What is lacking is the very obvious national-interest test. I think that a previous speaker commented on that. We need to look at the bigger picture, beyond individual, consumer, and indeed public interest to the broader national interests in the context of establishing what is appropriate. Our free-trade partners are all specifically protected under the law. We need to ensure that the interests of consumers and businesses are protected under the law. It would be also useful to know that we are considering our more general national interest. We recognise the importance and the value of trade. This country makes its living on trade. But we do not share the belief that any trade is good trade. We insist, rather, on trade that is fair, trade that is mutually beneficial, and, for those reasons, trade that is much more sustainable.

There are some provisions in this bill about reducing fees for small to medium sized enterprises, and that is appropriate, given, as was mentioned by the previous speaker, Clare Curran, issues of scale and of what is appropriate. There is also some suggestion about a waiver in terms of payment of fees for those who get to acquire another business or, in some instances, to engage in a restricted practice. We would like to engage in some discussion at the select committee about the appropriateness of those conditions. It seems that the Minister would be given some quite wide and non-specific powers to make regulations on the waiving of fees. We would like to challenge that to ensure that the best outcome is achieved.

In summary, we certainly support the general thrust of the bill. It is a positive step forward towards getting some international cooperation between agencies tasked with policing anti-competitive behaviour. We will be very happy to support the bill’s referral to a select committee, where some discussion and some appropriate amendments could be made to it. Kia ora koutou.

Debate interrupted.