Commerce Amendment Bill

Thank you, Madam Chair. I’m pleased that I was a little quicker this time than in the last part—and this being the least controversial part of the bill, because we supported Part 3 at the introduction of the bill, and we still support it.

Often the select committee will undertake deep scrutiny of elements that members find controversial, but one can also learn things about elements which the entire committee supports. That actually, as it transpired, was the case with these enforceable undertakings and why we’re even having those. To my point on Part 2, when I said there was no evidence found as to why we should change the current regime with regard to enforceable undertakings, there was, and officials were able to show us that the current cease and desist model is so ineffective that, in fact, it has never been used. That alone is some pretty good grounds for wanting to perhaps find a better model.

The parties, certainly across the Transport and Infrastructure Committee, had no fundamental argument about enforceable undertakings being the better vehicle. What we did discover though—and this is a question I will get to for the Minister—is about exactly when enforceable undertakings should be allowed to apply and what sorts of enforceable undertakings should be allowed to apply. So there’s no problem at all with the idea that enforceable undertakings will replace the cease and desist model. That is an absolute given. We supported it on the introduction; we still all support it now. It was when we were exploring how enforceable undertakings might be used in the case of mergers that there was, actually, not even contention—or perhaps contention but not disagreement—across the table. There was agreement with members as to why there was a certain area where we wouldn’t allow certain enforceable undertakings in mergers, particularly behavioural undertakings.

So this bill will enable structural undertakings to be accepted by the Commerce Commission in the case of these merger activities, but not behavioural undertakings. The part that was somewhat confusing, if you will, particularly because of the arguments that the Minister has reiterated in Part 1, that we should trust the Commerce Commission—don’t fear the reaper; we can trust them to do the right things—raises the question of consistency. The Minister himself has said that in his mind, parts 1 and 2 are consistent in the way they treat the Commerce Commission and the ability it has to use the tools in its tool box correctly and make the right decisions. Why then, here in Part 3, were officials adamant that we shouldn’t permit the Commerce Commission to have an additional tool in its tool box to allow it, at its own discretion, to choose to accept behavioural undertakings, enforceable undertakings, under a merger? They said, “Oh, there’s not been enough policy consultation on that matter.”

Now, quite frankly, listening to them in that deep discussion around the departmental report, on both sides of the table we thought, “Hey, this is a really good idea. This is actually a worthwhile tool to add to the tool box.” It doesn’t say the commission has to do it; it simply says here is an option the commission could choose, at its own discretion, to accept if it felt it was worthwhile. And the answer was “Oh, there’s not been enough consultation.” Well, we interpreted that to mean “We haven’t asked the Minister if he actually agrees with this yet or not.” But here’s an opportunity, Minister. We can ask you now, because we—and it was Mr Wood in the committee who spoke about this, alongside myself—think it’s a really good idea.

Having listened to you today, Mr Faafoi, I don’t necessarily agree with you around market studies, but you have said that we shouldn’t fear the Commerce Commission; we should have faith in them to be able to make the right decisions and to use the authority they have appropriately, to use the right tools in their kitbag in the right circumstances and in the right way. Therefore, we should be consistent. We should say, “We trust them.” So let’s trust them, Minister. Let’s get your officials to whip up a quick Supplementary Order Paper (SOP) and say that it’s at the Commerce Commission’s discretion, that we’ll allow them to accept behavioural undertakings as well. You’ve told us; you’ve convinced me, Minister. Well done—a really persuadable approach you’ve taken in the committee today. You’ve done it through conflict but none the less you’ve done it.

I agree with you. Let’s put a bit of confidence in them. Let’s give greater confidence to the Commerce Commission and say, “Look, we know you’ll do the right thing.” So let’s give them a quick SOP, Minister. Let’s give them the ability to choose themselves, at their discretion, whether or not the merger to accept behavioural undertakings—you’ve got faith in them. I think we’re prepared to back you up in this. A quick SOP—it should only take a minute or two.

Thank you, Mr Chair, for this opportunity to speak on Part 3 of this bill here, talking about enforceable undertakings. People tuning into this broadcast might be wondering what on earth an enforceable undertaking is. Well, it’s a mechanism that allows particular industries or businesses to reach an out-of-court settlement, as opposed to going through a very large, long, and incredibly expensive court process in relation to company law, in relation to competition. So it’s a cost-effective enforcement tool, as it can be used by a regulator to resolve alleged breaches of the law without asking the court to find a breach and impose a penalty. You can imagine—

💬 Kieran McAnulty: We know.

Well, thank you very much. I’m glad that you understand it, but people outside might not have had a chance to consider this possibility.

So what we’re looking for here is the opportunity for New Zealand businesses to deal with the Commerce Commission in a way that doesn’t necessarily involve three months of very painful court work and at colossal expense. What we’re trying to achieve is a competition framework that allows New Zealand consumers to have access to robustly competitive industries in whichever field of endeavour that they are dealing with, whether it’s supermarkets when buying their groceries, or fuel, or airports—you name it—so that we have a good system in place so that New Zealand consumers can get a fair go. This is part of the process.

The balance that we’re trying to achieve is having those rules in place and having them robustly enforced by the Commerce Commission so that New Zealand consumers are getting a fair deal and getting the best bang for their buck, and, at the same time, having a clear and transparent rules-based system so that New Zealand businesses who are investing and going into business can feel like they have a high degree of confidence that they know what the rules are and they know how to be on the right side of the rules, so that they can make investments and be confident that they are going to get something back for that investment. That’s the basis of all decent business.

I suppose it comes back to the point that I was making earlier: it all does rely on that discipline within Government and around the way that it conducts itself. What we saw last week was the Prime Minister acting as judge and jury on the question of fuel prices, where she said and declared, in thunderous tones, that “New Zealanders are being fleeced, and I’ve come to that conclusion based on whatever evidence I have. Then we’ll go and get the Commerce Commission to look at it, but I’ve already made the decision.” Not only was it the Prime Minister, but also the Minister of Transport, and also the Attorney-General answering on behalf of the Minister of Energy and Resources. When all these Cabinet Ministers and the Prime Minister have concluded something before they have even asked the question, that doesn’t lead to a high degree of certainty in the broader business community.

The only point I would make is that this particular part here, this provision that’s being brought in in Part 3 around enforceable undertakings, is a useful addition to the law, so that everybody can have a chance to deal with issues of contention in a manner that is sustainable from an economic point of view, particularly in a country such as ours where most businesses are small businesses and we don’t have colossal resources at our fingertips. So that all makes good sense, but it does rely on a broader discipline within which we are operating around the conduct of our political system, in relation to the legal system when it comes to competition law.

So the question I would ask the Minister is: can he reassure us that the Government that he is a member of will continue to act with good discipline—well, not continue to act with good discipline, but actually will reflect upon the manner with which it has operated over the past few weeks, and give us that assurance that they will actually let the law take its course in an appropriate way? I leave that for the Minister to consider.

Thank you, Mr Chair. Just a quick response to a couple of points raised by the Hon Paul Goldsmith and Brett Hudson. Of course, Mr Hudson, we will continue—as you said in your very truthful statement just seconds ago—to be disciplined.

Can I also just note that for a while I thought peace had broken out, until Mr Goldsmith got two minutes and 45 seconds into his speech, because I actually think he gave, up until that point, a pretty good synopsis of what exactly Part 3 is hoping to achieve in the wider context. So I won’t try and explain that, because I actually think he did a pretty good job of it himself.

To Mr Hudson, the question around behavioural undertakings—that wasn’t considered within the scope of this bill, but it’s still something that the Government would like to investigate and do some of the policy work on. So while Part 3 allows the Commerce Commission to look into structural undertakings, as he will know, we believe that more work needs to be done around behavioural undertakings for that to be legislated for. So, hopefully, that will answer that question.

Thank you, Mr Chair. Well, look, I want to extend, in this sense of bipartisanship, that one of the best things—the best policy-making machine we’ve got across Government—is this House. So I’d like to extend an invitation to the Minister, if he will take it up. I’m pretty sure I’ll get the support of my colleagues here, and we’ll talk to our House leadership as well. We have got the opportunity here, Mr Faafoi, to do the only depth of policy consideration that New Zealanders need, which is for their elected officials, their elected representatives, to make a decision about the legislation that governs their behaviour and governs the behaviour of businesses. So enforceable undertakings, behavioural undertakings—Mr Faafoi, we can do it here.

It is true there was a question about whether or not behavioural undertakings were in scope. As I recall the discussions in the Transport and Infrastructure Committee, it was never established that they were out of scope. The question was raised by the Clerk of the House, but instead, when officials said “Oh no, no, there should be more consultation.”—the code for “We haven’t talked to the Minister.”—it was allowed to sail through, principally because, obviously, the Government members were going to vote in accordance with that.

So here’s an opportunity, Mr Faafoi. We could seek the leave of the House to allow that to be within the scope of the bill, because the House is sovereign. So we could just, at this moment tonight, seek the leave of the House—can we add behavioural undertakings in?

I’ll go even further than that, Mr Faafoi, because it is quite possible that under the Standing Orders, the committee of the whole House can’t make that decision. So we could resolve to go back. We could report progress and go back to the House, and we could seek the leave to do that. I’m sure, Mr Faafoi, my colleagues would support you then.

If there is an issue with the Standing Orders, we would give leave to immediately come back into committee for the same orders of the day for which we first resolved to go into committee this afternoon. We would support you that much, Minister. Just go to the House and put the leave to add behavioural undertakings to the scope. We can resolve to go back into this committee for all of the orders of the day. We can then have a policy discussion about behavioural undertakings. It’s got the support of your own members. Mr Wood thought it was a wonderful tool to add to the tool box. I agreed with him. The other members on the committee seemed to think it was a good idea as well, and we could craft some policy today, Minister, in this House.

That’s Parliament at its finest. That’s the reason that the public elect us to this place—to make those decisions for them. So let’s show them just how nimble—we can be an agile Parliament for a change. Instead of the old waterfall model, let’s get agile on this. We could do this. Put down a scrum, Minister—maybe one or two. We could do this work right now, and we could resolve as a group of parliamentarians whether this is a good idea and should we put it in this amendment bill as it’s going through, because we have the right as a Parliament. Maybe not as this committee of the whole House, but as a Parliament we have the right to add that to the scope, because we have that sovereignty. Despite the Minister wanting to outsource a bit of that in Part 2, which has been voted on and has been successful, we still have the right to make that determination.

So, Minister, no games here—no political games at all. Both sides of the table in the select committee thought this was a good additional tool. To be absolutely clear, we are not suggesting it as a policy, which would mandate that the Commerce Commission had to accept it. We are not suggesting that it is something that business would have the right to demand, nor would have any judicial avenue to contest; we are saying here’s an opportunity to give a tool in the tool kit of the Commerce Commission that would be at its discretion to undertake. Minister, we’re even happy—seeing as you seemed to be quite happy in Part 1—that you as a Minister, and, therefore, Cabinet don’t get a say in whether or not it’s used in any given situation. But give the tool to the Commerce Commission and allow them to decide whether or not to use it in a given circumstance. Don’t give any right of appeal to the courts for a business, but make it purely a discretionary thing for the Commerce Commission. It adds a useful and practical tool into their tool kit, something that we’d argue—and I think your own colleagues would argue, given that conversation in select committee—would advance the interests of New Zealand, and it actually would advance the interests of business, because it won’t get much easier to reach certain undertakings through a merger process, and it would be the power of Parliament in action.

Those people listening or watching today would be able to witness that, Minister. It doesn’t necessarily happen all that often, but this is our opportunity to grasp the nettle, so to speak, and to do it here today. So I make that offer to you, Minister. We can resolve to go back to the House, get leave to add this to the scope, have a policy discussion here, and let’s add these undertakings as well.

I move, That the question be now put.

Motion agreed to.

Part 3 agreed to.

Schedule agreed to.

Clauses 1 to 3