Commerce (Cartels and Other Matters) Amendment Bill

I move, That the Commerce (Cartels and Other Matters) Amendment Bill be now read a third time. This bill is an important action under the Business Growth Agenda to assist in improving the competition regime to protect consumers and also to promote innovation. The bill amends the Commerce Act of 1986 to allow pro-competitive collaboration between firms, while also deterring hard-core cartel behaviour. The bill clarifies the scope of the prohibition in relation to cartel conduct. It specifically prohibits price fixing, market allocation, and output restrictions between competitors. To ensure the bill encourages collaboration, the bill also includes two new exceptions: a collaborative activity exception and an exception for vertical supply agreements.

The collaborative activity exception replaces the current joint venture exception, and enables businesses to assess for themselves whether a proposed collaboration falls within its scope. It asks whether the collaborative activity has a legitimate collaborative purpose, and whether a cartel provision is reasonably necessary to achieve that purpose. The exception for vertical supply arrangements ensures that vertical supply arrangements within a vertically integrated company are exempt, except where they have an anti-competitive purpose. Where businesses are unsure whether an activity might risk breaching the Act, the bill also introduces a clearance regime for collaborative activities. Businesses will be able to apply to the Commerce Commission to seek clearance for their arrangements, which will provide businesses with greater certainty when needed.

The bill also makes a number of other amendments to the Act, including retargeting extraterritorial jurisdiction provisions, introducing a new regime to regulate overseas mergers, and amendments to improve the efficiency of the Commerce Commission’s authorisation process. The bill transitions the competition regime for international shipping from the Shipping Act of 1987 into the Commerce Act. In addition, it includes a new targeted exemption for specified international liner shipping activities, such as vessel sharing. The introduction of the new exception will mean that ocean carriers will have certainty that specified shipping activities, such as coordinating of sailing timetables and pooling of vessels, will be exempt from the prohibitions in the Commerce Act against anti-competitive agreements. The exception should reduce the compliance costs for ocean carriers by providing greater certainty, but continue to provide protection to New Zealanders against anti-competitive conduct. It will come into effect after a 2-year transitional period.

There are many people to thank in relation to this bill. The previous commerce Ministers, Simon Power, Craig Foss, and Paul Goldsmith, are also responsible for this bill. I also thank the members of the Commerce Committee for their work on and contribution to this bill, plus the many individuals and groups that made submissions as part of the policy and legislative processes that led to this bill. I commend the bill to the House.

I am going to be brief. This is the third reading of a bill that has been around for about 5 years since its first reading. It has been through four commerce Ministers. Labour supports it, and I want to acknowledge the Minister who just spoke to us, Jacqui Dean, who has actually finally pushed this through, and not only that but has also listened to industry—which identified issues with vessel-sharing agreements—and has come up with a solution that is largely supported in this House. It has had a few changes since the Commerce Committee.

Labour is disappointed that the Government went soft on criminal penalties and missed the opportunity for a new definition of anti-competitive conduct in section 36 of the Commerce Act. We have a number of valedictories tonight. We want this bill to get through. It has been on the Order Paper for long enough. We believe that there is support across the House to get it through. It should go through in the 51st Parliament. We support it. We should pass this bill in this Parliament, so I commend it to the House.

Thank you for the opportunity to take a call on the Commerce (Cartels and Other Matters) Amendment Bill. As the previous speaker, Clare Curran, said, it has been a while since we last debated this important bill, which seeks to enable companies to collaborate their activities where it will enhance and promote competition and efficiency. Hopefully today we can manage to see the end of this bill, because it has been a long time coming.

The Commerce (Cartels and Other Matters) Amendment Bill amends the Commerce Act of 1986 to allow pro-competitive collaboration between firms while also deterring anti-competitive cartel conduct, and I think that is an important aspect. I would like to acknowledge the hard work that the current and former Ministers of Commerce and Consumer Affairs Hon Craig Foss, Paul Goldsmith, and Jacqui Dean have all done towards the passage of this important bill.

This bill was first introduced to the House on 13 October in 2011, and was referred to the Commerce Committee after its first reading on 24 July 2012. The committee, under my predecessor as the chair of the Commerce Committee, Jonathan Young MP, received written submissions from 32 submitters and heard 16 oral submissions on the bill. The committee reported the bill back to the House on 13 May 2013. The second reading was completed on 26 November in 2014, and today we are continuing its official passage through the House.

Supporting strong capital markets in New Zealand and around the world provides a vital source of finance to help our businesses grow, create jobs, and support Kiwi families. They are central to improving the financial well-being of all New Zealanders and to the welfare of the nation as a whole. National firmly believes in supporting New Zealand businesses to be the best that they can be in both domestic and international markets. This bill, as an important part of the Government’s Business Growth Agenda, ensures that we continue to help business compete in a fair and productive New Zealand economy.

Anti-competitive behaviour and increasing costs of production affect the attractiveness of companies doing business in domestic and international markets, while consumers have to pay higher prices—consumers hate paying higher prices, particularly on things like fruit and vegetables. I think having higher taxes would mean we would actually pay more for vegetables and fruit. But I digress.

Cartels harm our consumer industries, and it is important that our law is fit for purpose to support good business practices and financial markets in our country. The existing law currently has criminal sanctions and other punitive measures in place that are unsuitable for modern commercial relationships where companies and industries want to work to build wider ideals of the services they provide. We as a Parliament should rightfully assist them by cutting redundant red tape in the interests of good business and commercial practice. This bill actually does that, and, as other members have said, I am interested in getting this passed today, so I commend the bill to the House.

The Labour Party will run a relentlessly positive campaign to restore the Kiwi Dream. This bill is a bit watered down. The amendments to section 36 of the principal Act that Clayton Cosgrove put forward should have been amended. But the Parliament has dragged its feet for too long, so we are just going to support this bill, and I recommend it to the House.

It is a pleasure to rise in support of the Commerce (Cartels and Other Matters) Amendment Bill in this, its third reading. It certainly does appear that this bill is likely to pass into law. It is a good thing and well-looked forward to. Unlike the promise from the member across the way, Dr David Clark, about being relentlessly positive, this party, this Government has been relentlessly positive and relentlessly ambitious for New Zealanders for the best part of 9 years, and we will be working hard to secure their confidence for another 3.

But on to this bill—the bill is about supporting, deepening, and broadening capital markets for New Zealand. It is a simple reality that New Zealanders do not necessarily look to put their personal capital into areas that help to diversify and, particularly, grow new parts of our economy. New Zealand does have a reliance on foreign capital, and it is important that our capital markets and our capital functions give confidence to domestic and international investors, and, indeed, encourage them to look to New Zealand as a place for investing their money and achieving the returns that they seek with that. If we can encourage more investment—both domestic and, particularly, foreign—then we will get the opportunity to broaden and deepen our capital markets. Importantly, we will give the necessary to new parts of our economy to continue their growth.

I could give an example from the sector that I come from, for instance, the technology sector, particularly in information and communications technology, which is an area where we have seen some stunning companies and stunning products and services. That is a huge contributor now to our diversified economy, but one that still suffers from, shall we say, a level of under-investment. We could do with more, and it is important that we permit structures that will encourage investors to participate, particularly where we are enabling pro-competitive collaboration, which this bill will do.

I was particularly impressed to see—just before I wrap up, because no one needs to take too long on this bill—that there was an element of international shipping where New Zealand is somewhat of an outlier in our regulation of that. This bill will bring it into the purview of the Commerce Act and will improve regulatory oversight and transparency in that area. This is a bill worthy of Parliament’s support, as well as the consideration it has had. It will improve investment into New Zealand businesses, and it will improve our economy. I commend it to the House.

Tēnā koe e Te Māngai. I rise to speak about the cartels bill before us. I have heard the Government members say that they are “relentlessly positive”.

💬 Hon Clayton Cosgrove: That’s us.

Oh, and Labour is “relentlessly positive” too. On this bill, we see the only thing that is relentlessly positive is in the advantages for big business in completely gutting the most important provisions of this bill. We think that this bill is far too soft on white-collar crime and far too soft on fraudsters who rip off our economy and make consumers pay too much for their goods and services. We think this bill, far from cracking down on cartels, will actually enable cosy deals between dominant companies that disadvantage consumers and disadvantage small and medium sized enterprises in our economy.

Let us go through a few things. Firstly, this bill, as it went through the Commerce Committee, had the provision that cartels would be criminalised, but only for hard-core cartels. The bill was very carefully worded to just identify that it was hard-core cartels that would be criminalised. Part of the justification put forward by the Ministry of Business, Innovation and Employment—echoed, I should say by the Commerce Committee in its report—is that, it said, tough penalties make it easier to detect cartels. It said cartel members themselves do not operate cartels when there is a threat of jail time. It is a significant deterrent. And what we heard was that all OECD countries have criminal sanctions in their cartels legislation. We would be stepping outside of the regulatory framework of the countries that we should be operating with in order to share information and have a common regulatory framework that would get to grips with these insidious cartels, which are so dangerous for the economy.

In 2015 then commerce Minister, Paul Goldsmith, introduced a new Supplementary Order Paper that would remove criminalisation from the bill. So the Green Party tried to find out why that had happened. We thought that maybe there was substantive new research that might have come to light to say that criminalising cartels was not a good idea. There might have been some substantiation to the idea that criminalisation would not be in the advantage of the economy overall in providing fair competition. What did we find? We found that it had been a political decision—bitterly opposed, I should say, by Australian competition authorities, who complained that this would bust a hole between Australia and New Zealand’s regulatory regime around cartels.

Where did this political decision come from? Well, unfortunately, there was all too little information. What we did see was the fingerprints of some very strong lobbying by big-business interests. Should we be surprised that this Government would cave in to big-business interests in weakening the provisions on monopolies and cartels? I do not think it should surprise anyone. That is what we have seen in what it has done over 9 years of Government.

So we oppose the weakening of this legislation in other ways, as well. New section 31(1)(b), inserted by clause 7, says: “the cartel provision is reasonably necessary for the … collaborative activity.” So that means that you can set up a collaborative activity, and you can have a cartel associated with that collaborative activity, as long as it is “reasonably necessary” in order to support that collaboration. That is a huge gap in what this cartel legislation will actually be achieving.

I think we can probably see the rise of collaborative activities that take advantage of new section 31(1), inserted by clause 7, or new section 31(2)(b)—that collaborative activity “is not carried on for the dominant purpose of lessening competition …”. So, collaborative activity is fine, as long as it does not have the dominant purpose of lessening competition. It can be ancillary; it can lessen competition as a result of the collaborative activity, as long as it is not the dominant purpose. In terms of a loophole in this bill, that is an enormous loophole.

Thirdly, in new section 65A, inserted by clause 12, there is clearance, which means a free pass and a permission to engage in collaborative activity. Clearance will be granted if collaboration will not have the effect of substantially lessening competition. So it can lessen competition; it just cannot do it substantially—whatever that means.

So in these provisions, we have seen the Government drive an absolute truckload through this legislation. We have seen it gutted, and, from the Green’s perspective, we have supported this legislation from the beginning—right through the process. But at the time that National started gutting this legislation for the sake of its big-company mates, we said: “No. It doesn’t meet the minimum standards that cartel laws should.”

It is out of step with other countries internationally. It is out of step with what we should be doing in order to have decent laws on competition in this country. And I would like to pay tribute to Clayton Cosgrove, who submitted a very good amendment to this legislation saying that, actually, one of the areas that does need to be fixed is section 36 of the Commerce Act, and that we should be moving from a purpose test on a dominant market position to an effects test. That would have made a big difference. But did the Government accept that? Sadly, no.

Time after time we have seen the Government go soft, in terms of big-company interest and the lessening of competition. What we heard Simon Power say in 2010 when this whole process started was that cartels protect inefficient producers, creating a drag on the economy and a burden on businesses and consumers who buy their products. What we see is legislation that started out with a strong position from the then Minister, Simon Power, went through the Commerce Committee, had the full support of all the political parties through the Commerce Committee, and was then gutted.

We will oppose this legislation. We do not think that this bill is worthy to go through. It is a slap in the face to the consumers, to the small to medium sized enterprises, and to the people who trust our regulatory system to stop abuses of competition. This is one of the reasons why our productivity is 30 percent lower than Australia’s. It is one of the reasons why our workers get paid 30 percent less than Australians do. We have very, very poor competition, as is repeatedly said by the Productivity Commission. It keeps on saying that, as a small society, New Zealand needs to have very strong competition policy. The Government has absolutely failed to meet that test through this legislation. We will oppose it. The Greens will champion fair competition. We will protect consumers. We will support small and medium sized enterprises. We will stop white-collar crime and dirty money from flowing into this economy. Thank you.

I am pleased to rise on behalf of New Zealand First and my fine colleague Fletcher Tabuteau and take a call in the third reading of the Commerce (Cartels and Other Matters) Amendment Bill. I want to say that New Zealand First supported this bill at its first reading in this House and going to the select committee stage. The Commerce Committee—a very fine-working select committee—worked really hard on ensuring that we made good amendments to this bill, to strengthen the bill in order for it to be fit for purpose.

I do not want to take too much time and go over what previous speakers before me have said, but what I do want to say is that when the Minister came through with a Supplementary Order Paper and dumped it on this bill, it actually made this bill become toothless. It actually reacted like, I guess, a grenade on this bill and actually ruined it. So on that basis, and the fact that this bill is not fit for purpose and is not going to be providing the very protection from cartels that it should be, New Zealand First will not be supporting it. Thank you.

I am sure there is no collusion going on with these short calls—some sort of agreement seems to have broken out. So in the interest of that, I will attempt to do something different to show our independence. I do not want to run foul of this bill in its third reading.

I am very pleased to speak to this Commerce (Cartels and Other Matters) Amendment Bill in its third reading. I have been very fortunate to sit on the Health Committee—which I seem to be relatively well-known for, for a variety of reasons—but I have also had the pleasure of sitting on the Commerce Committee, which provided a welcome contrast. I want to pick up on something the last member, Ria Bond, just noted: that, actually, the select committee has been incredibly cooperative in working through this bill.

Part of it, too, has been working with different Ministers. As you would probably appreciate, Mr Assistant Speaker—apologies, Mr Assistant Speaker; I am not meant to bring you into the debate—there are differences in each Minister, and that has actually, I think, contributed to a robustness in this piece of legislation. I want to acknowledge Minister Dean for the work that she has done to pick up the portfolio more recently than not, and for bringing this bill, which has been around for a while, to a conclusion. So to Minister Jacqui Dean: thank you for your work and leadership in this regard.

Before Minister Dean was Minister Goldsmith, and before him was Minister Foss. As I said at the start, each Minister brings a slightly different perspective. I think, in a paradoxical way, this has actually strengthened the whole process to enable us to get to where we are today. I am actually quite pleased that—you know, we have been ribbed, for want of a better word, and in some ways continue to be, across the House at the moment. This has been a long process, but I think it is one that has been quite correctly followed. I think it is really good that today, with a spot of luck and without pre-empting the vote, we are going to bring it to a conclusion.

It is no surprise that this bill sits in, sort of, a wider framework for the Government around matters of commerce and around consumer affairs. The select committee, most recently, has also gone through the patent attorneys bill—now an Act. There are slightly different elements, but they are related—again, it is about how we continue to have fair and proper competition. You hear from me and other members, particularly of the Government, about wanting to see a continually strengthening economy—that we are trade-focused and we are going to reduce the red tape. Well, actually, it is legislation like this that makes a difference.

We had also had, recently, legislation around those—I think it was the piece of legislation around countervailing duties and dumping. Again, these are all small—I was going to say small cogs, but I do not think that is appropriate; they are actually significant cogs in a much wider machine. We have also had a bill introduced around financial services.

Here we are, talking about people potentially working in a cartel space. We are also looking at how we construct our commerce systems, if you will, to be—as I was talking about with the Minister earlier—centred around the borrower. In terms of this particular Act, we are dealing, well, with cartels.

💬 Dr David Clark: Sort out section 36.

I actually thought section 30 is probably the most interesting, initially, because it indicates what cartels are. I think that one of the things that is easy, in debates, is to get a bit lost in what the specifics are, with the wider viewpoint. When we are talking about cartels—particularly for those who, I am sure, are riveted at home; perhaps including my father, which is a worry—the cartel provisions are around, primarily, three areas. They are articulated in section 30A, which, for the member who just interjected—

💬 Dr David Clark: What are they?

—is before section 36. They are price-fixing, restricting output, and market allocation. I think most of us, when we think of cartels and why there is a piece of legislation being put forward, will think of cartel behaviour primarily around the price-fixing. Having worked in the insurance area for a number of years, it was always quite critical that we were not price-fixing, and were never to be seen to be doing so as well. Without—I hope—crossing any boundaries, you always made sure that you were, effectively, never in the same room with a competitor, lest you be accused of somehow colluding and bringing things together.

So, in the first instance, it is cartel activities around price fixing. The second is around restricting output. I think it is probably quite intuitive to most of us that you can affect the price by affecting supply. So if you have decided to buy whole container of widgets, the public desires two containers of widgets, and you decide to give out only half, then you have involved yourself in restricting output there.

Then there is the whole element around market allocation. So that is what we are talking about here. As has been noted, this bill has been debated since about 2011. But as I think you can probably understand, Mr Assistant Speaker and others, there is a complexity in all of those three areas that needs to be well looked at. One of the things we do not want to do, in trying to seek the good of stopping cartel behaviour, is stop proper, legitimate behaviours.

In fact, there are plenty of instances where businesses rightly work together, where they actually rightly share information in order to work more cooperatively. One of them—and this bill looks at it—comes up around the maritime industry. I think, for the first time, we are beginning to regulate quite strongly on any cartel behaviour around maritime trade. But one of the things we want to be really careful of is not affecting—I would suggest probably the most critical one actually is trade into the Pacific. Having lived in the Islands for a few years, you certainly appreciate there is almost a singular ship, but multiple providers sending supplies to Fiji, or New Caledonia, or Samoa, or the like. What this bill does is say: “Look, those shipping groups and agencies shouldn’t be in cartel behaviour, but we recognise that they also have to cooperate.” Again, it is just a small illustration of why legislation like this takes a little bit of time—a bit like this speech.

Why these things take a little bit of time is that you absolutely have to get it right. So we definitely do not want cartel behaviour occurring in between our trade and in the maritime sector going into, for example, the Islands. But at the same time we want to make sure that legitimate business practices occur. Again, to illustrate that—at the moment it is very normal, with one ship going to the Islands, that multiple ship users, which is probably a very ineloquent way to put it, but those who are sending their products north can actually talk and discuss, work out their timetabling together, and so forth. So that makes a lot of sense.

The other area that has got a lot of traction here today has been around the whole reason why we have chosen not to criminalise cartel behaviour. I think there has been a lot of robust discussion around that, and that has been very welcome. You would expect it in this House, and you would expect of the Opposition in particular. As one who sat on the committee and listened to and talked to the various Ministers, I say that when you have a system in the civil area that is working, you keep it. I know it is a rather simplistic way to look at it, but basically the civil regime is working at the moment for managing cartel systems.

💬 Hon Jacqui Dean: Big fines.

Yes, substantial fines, actually.

💬 Hon Jacqui Dean: $6 million.

The Minister says it is $6 million. So I think, actually, it puts a bit of context in there, that OK, if it is not in the criminal regime, we are not talking about this simply being a light-handed slap on the wrist in the civil system. In fact, when you are up into fines of $6 million you are talking something quite substantial.

I think also—and look, I am no lawyer—adding more things into the criminal code almost for the sake of it is not necessary, nor appropriate. I think we do that carefully and cautiously. So I think fundamentally in this space we have achieved the right balance. As I said at the start, it is working within the civil structure and so we need to keep it there at this point in time. I mean, any Government, present or future, can always reserve the right to relook at that. In fact, one thing I would be interested in, post the enactment of the bill because it does not substantially affect it, is whether or not there are regulatory powers to make those changes. I suspect anything like that would take some work, through the usual legislative process.

We have made a number of amendments within the bill. This is particularly to create the understandable exceptions that are required. I mentioned a little bit earlier about collaborative activities, and tried to illustrate them somewhat in the maritime area. You have also got the whole vertical supply agreement side of things, and that is effectively a manufacturer who sells directly online, but is also selling to a retailer. A little bit, you could imagine, is someone who—

💬 Hon Jacqui Dean: Pro-competitive.

Well, it is pro-competitive but it is also trying to appreciate that we want to stop—as I probably keep repeating—cartel behaviour.

💬 Hon Jacqui Dean: That’s right.

Absolutely. But we need to recognise that there is a rightful complexity to how people conduct business these days. So if someone is, again, making again, widgets, we absolutely want them to be able to sell them to various retailers out in the market.

💬 Dr David Clark: What about section 36?

But we also want to be able to have them sell them on, say, TradeMe and the like.

I am conscious that I have only really got to section 30. I know my colleague across the House wants me to get to section 36. I do not think that in the 5 seconds left I can get through all the clauses, but I commend this bill to the House.

Thank you for the opportunity to speak on the Commerce (Cartels and Other Matters) Amendment Bill. In my comments this afternoon I want to reaffirm Labour’s support for this bill. I want to talk through some of the reasons for that, but there is a real clamour arising in this House, and I think on the streets of the country, to hear about section 36 of the principal Act and to hear about Clayton Cosgrove’s Supplementary Order Paper (SOP) 408. So in my comments a little bit later I want to touch on that because I think it was one of the real missed opportunities of this bill, to make sure that we have law in this country that is really fit for purpose, that is not there just for the big guys, and that gives the little guy a fair crack of the whip.

Labour’s basic position on this bill is that our starting point here in New Zealand is that we have very, very weak competition law—very, very weak law. It needs to be substantially improved to give consumers the protection that they need from over-mighty monopolies and oligopolies, and from people who play fast and loose with the rules with the significant market power. It also needs to be made fairer for the small businesses—the men and women of our country who form a significant part of our economy, who are employers of large numbers of people, but are often really up against it. One of the ways in which they are often up against it is that they have got these big guys operating in their sectors that have such significant market power.

So what Labour says about this bill is that it helps. It moves us in the right direction. It puts in place some clearer and better rules. But we could have done so much better. My colleague Simon O’Connor, who just spoke on the bill, went through some of the key aspects of the bill, and these are things that Labour does support. We have got some clearer rules around the definitions of cartels. We have got some clearer rules around some of their practices that we do want to ensure are not encouraged and are in fact discouraged—practices such as restricting outputs, so they are controlling the supply and, therefore, the price of goods, potentially, in the market place. That is one of the ways in which big companies can have the biggest impact on consumers and on small businesses.

One of the things that the Labour Party also wants to comment on in respect of this bill is that, I mean, we have really seen some sheer athleticism and speed from the Government benches on this one. I have been sitting here, and it is like Usain Bolt has been running through the Chamber. The Government started this one back in 2012 when it received a report from a select committee on this issue—at the request of the Minister at the time, I might add. It has taken 5 years to progress the bill through the process to the stage where we are, with, what, 4 sitting days to go. We might actually get this bill over the line, depending on how the speeches go tonight and depending on how long they go on for.

I guess this does speak to a broader concern that we have got that this whole area—my colleague Mr Cosgrove, in his earlier speeches in respect of this bill, actually spoke about this. Often this Government does seem to have really downplayed the importance of commerce legislation. It is kind of seen as maybe a bit technical and wonky but, actually, it has very real-world impacts in terms of consumers, in terms of small businesses, and in terms of the confidence that people have to invest in the business sector and in our market places. So we think it could have done a much better job of that.

I will give the Government this, though: it has moved far quicker on this one than it has moved on matters like multinational tax, than it has moved on the housing crisis, than it has moved on properly funding health and education—things that the next Labour Government will really rip right into.

One of the areas that the bill seeks to address—and this was one of the starting points—is ensuring that we have some rational rules in respect of the shipping and civil aviation sectors, bringing them into the Commerce Act regime. One of the things that we in the Labour Party do support is having reasonably consistent rules across different sectors of the economy. We support that from the point of view of legal fairness. We support that from the point of view of simplicity. We support that from the point of view that if you are a consumer or you are a business and you feel that a wrong has been done against you, there is a relatively simple process and a consistent set of rules sitting up there in the legislative framework that you can go to, to get some relief. So we think that does make some sense.

What the bill does do is make some differentiation between what is termed pro-competitive, collaborative behaviour and hard-core cartels. That is obviously quite a fine distinction, but it is an important one because it does recognise, I think in a reasonably pragmatic way, that companies do not always exist in splendid isolation and that there sometimes are market conditions where it can be appropriate for there to be a degree of cooperation between companies that does not necessarily lurch over into monopolistic, oligopolistic, or cartel-like behaviour. That distinction between the hard-core cartels, where you have got real cartel-like behaviour and real collusion on things like price, and sensible, pragmatic collaboration that does not go into that area is very important.

I might note on that one that of course we have seen over the last month or so some really concerning signs coming through about what might be happening with our major petrol suppliers in New Zealand, where there is significant evidence from the investigation that Minister Collins launched that there may be a degree of cartel-like behaviour between some of those companies in the mechanism that they use to set prices. What the Labour Party has said is that instead of just pushing that out to the back of beyond, which is what this Government has done, there should be an immediate Commerce Commission inquiry into that, because that is a very good example of the way in which cartel-like behaviour can potentially have a huge impact on consumers. Now, we need to wait for the full facts of that one to come out, but we say: let us get an investigation going into that as soon as we possibly can.

I want to turn to proposed new section 36, as I know that people out there have been waiting for this one. This was from a very important SOP, which we really regret was not picked up earlier on in the legislative process, from Clayton Cosgrove, who of course was previously a very, very effective Labour spokesperson for commerce. I want to acknowledge him in the House. He gave his valedictory speech in the House last night, and he is extremely experienced in this area and has done some great work. What new section 36 would have done would have been quite important, because what we have got at the moment is that you have to prove intent. If you are looking to prove whether or not cartel behaviour has occurred, you have got to prove intent—the mens rea in the law. Were they actually thinking and planning up here that they would collude? Of course, that is actually notoriously difficult to prove. It is notoriously difficult to get inside the minds of people who might be making these decisions.

So what Clayton Cosgrove’s SOP 408 would have done, which we would have liked to see in the bill and which would have significantly strengthened protections for consumers and small businesses, was say that, well, it is not just the intent that matters; actually, it is the impact—actually, it is the impact. If we can see that there has been behaviour that is in the nature of collusion and we can see that it has done damage downstream, whether it is in the form of elevated prices for consumers or whether it has been smaller competitors knocked out of the market—that impact, if we can conclusively prove it, should actually be enough. We should not have to go through the legal hoops of trying to make a window into the souls of men, as Elizabeth I said, of trying to prove some sort mental process that went on inside the heads of people in boardrooms when decisions to collude may have been made. So we regret that that was not picked up by the Government, and that is something that the next Labour Government would be keen to look at.

The final quick comment I want to make is that the other thing that we regret in this bill is that the Government, through Minister Goldsmith, intervened in the process to remove the criminalisation of cartel behaviour. We strongly, strongly regret that, because we say that if this issue was important enough to put up from the Government benches, to spend 5 years making our way through it—if it is that important to our economy, if it is that important to our small businesses, if it is that important to our consumers, and if we have potentially got big businesses that are taking advantage of their market power to line their own pockets, quite frankly, and to make unreasonable profits at the expense of others, then that, to me, is behaviour that should have criminal sanction.

We on this side of the House stand on the side of the small guy, of the small-business owner, and of the consumer, and if they are getting ripped off by people who are engaging in collusive practices, then we do not see why that should not be criminal behaviour. It just stinks a little bit that sometimes the kind of white-collar activities do not get the same kind of sanction that people at the other end of our society consistently face if they break the rules. So we thought that was a real shame.

I did note in some of the papers that that change by Minister Goldsmith was welcomed by the ACT Party, and that of course is entirely consistent with its position in respect of always looking out for the big guy—we had it in the House the other day when we spoke about Uber and other companies who are not paying their fair share of taxes in New Zealand, and that outraged Mr Seymour. Well, this is exactly the same thing. It is letting the big guys get away with it. When they do wrong, they do not face the same sanctions that other people might.

So in winding up my comments at this particular time, I would like to say that the Labour Party does support the general intent of this bill. It is an improvement on where we were, but we could have done so much better, and we look forward to doing that after 24 September. Thank you.

Thank you for the opportunity to support the Commerce (Cartels and Other Matters) Amendment Bill in its third reading. This Government has been working for the past 9 years to make sure that the consumers benefit from the laws that are being passed through this House. Some of the points I would like to touch upon first of all, are those laws that have passed and are benefiting consumers in the long term. There are improved financial reporting requirements, and so far 90 percent of New Zealand businesses no longer need to produce full financial accounting. That is helping businesses to do what they are best at. We do not want them to just sit in front of computers or file papers. We want them to go out and do the business that they are best at.

We have also strengthened the capital market and created more opportunities through crowdfunding. We have got many small investors who do not have real opportunity because they do not have big money, but through crowdfunding they can collaborate and have good capital, and they can invest in start-up companies that are looking for some capital investment. We have also tightened the regime for those providing financial advice, because those small investors are at risk. We do not want them to make a wrong decision in investing somewhere on the wrong advice from a financial adviser who advised them to invest somewhere, and then lose all their capital. We want to ensure that the advice given by the financial advisers is appropriate and helpful to them.

We have introduced standardised reporting for the KiwiSaver funds, allowing a more informed comparison. They are required to give what kind of return they are giving in comparison to others, so that the investors feel confident. If investors do not get the proper return, they can move on to some other KiwiSaver fund so that they can have secure funding and good return on their investment.

We have progressed our commitment toward a single economic market with Australia. This is very important because we are a very small economy in comparison with Australia. We want to ensure that with a single regime there is benefit to our small businesses by filing less paperwork and having more access to the bigger market, so that they can have better access to Australian markets. Some of the bills that have been passed by this House are helping the businesses.

We have improved intellectual property settings, which allow innovative local companies to grow. The other day I had a visit from a company from Dunedin that has patented an instrument that is helpful in detecting gases through a laser. That is a very innovative product is selling very well in New Zealand and they are going to launch that product in Australia. So we want to talk to those innovative companies and help them have access to the market.

This bill, which has got some major provisions, will help competitive behaviour for the companies, which benefits the consumer. One example I would like to quote is that when we travel from New Zealand to other parts of the world, the code-sharing between the airlines has really helped the competitive nature of that. I remember when I came to New Zealand in early 2000, it used to cost about $3,000 to travel to India. Now it has come down to almost $1,500 to travel to India. That is because of the competitive nature—we have got those proper laws in place.

This bill has provision for a penalty regime, whereby if the Commerce Commission finds that somebody is doing something uncompetitive in business, then there are penalties. For example, recently we saw that the Commerce Commission imposed $6 million on Air New Zealand because of its uncompetitive behaviour in freight movement. We have given an exemption for maritime so that they can work together, because, as I said, we are a small economy. We do not have too much freight movement in the Pacific in particular. We want to ensure that the importers as well as the exporters get best benefit out of the pricing, and they can collaborate in ship movements so that one vessel can take all of the products together of those importers and exporters.

For individuals a penalty with a limit of half a million dollars can be imposed, whereas there is no limit for corporates. The Commerce Commission can decide whatever amount it wants to impose for unruly behaviour, and that can help a more competitive nature. In fact, as I said, going back to the shipping on the Pacific Island route, there are some dedicated shipping companies between New Zealand and the Pacific Islands that operate on a thin margin to provide essential services. Many of these routes are serviced through vessels that link slots and share arrangements, which would be permitted by the block exemption. That is important because we want to ensure that our importers and exporters are not harmed by this.

Overseas acquisition is another area that is very important for us because what happens is that if a company merges overseas, the consumer over here can be affected. We want to ensure that if such mergers take place, the Commerce Commission has the tools to look into those areas and ensure that those mergers are not going to affect the New Zealand consumers. For example, we can see that many of the online television companies are providing content to consumers. We want to ensure that the consumers and the viewers in New Zealand have access to those markets and that there is no monopoly on such events, particularly the sports events.

A strong capital market provides vital sources of finance to help our businesses to grow and create jobs. These are central to improving the financial well-being of New Zealanders. We want to ensure that we have proper laws in place so that the financial market can grow. We firmly believe in supporting New Zealand businesses to be the best they can be in both the domestic as well as international market. We want to ensure that they have got those facilities. The Commerce (Cartels and Other Matters) Amendment Bill promotes economic growth by enabling broad competitive collaborative between firms while also deterring hard-core cartel conduct. It is a very important bill and I commend it to the House.