Commerce Amendment Bill

When we last debated this bill, we—I would like to now call a five-minute call. No? Would anyone care to take a call? A five-minute call previously allocated to the Māori Party.

All right, then. Yeah, we were just hoping that—no one seemed to want to speak on this; we normally go to a vote. So I’m happy to speak up and say we commend this bill to the House.

I rise on behalf of the National Party to speak in respect of the Commerce Amendment Bill. This bill will amend the Commerce Act 1986 to ensure that it better fulfils its purpose of promoting competition. In particular, the bill strengthens the prohibition against the misuse of market power in section 36 of the Act.

It also aligns the rules for trans-Tasman markets, it prohibits the misuse of market power in New Zealand markets, and it strengthens and clarifies prohibitions in that respect. It has similar prohibitions against Australian or trans-Tasman firms with substantial market power taking advantage of that power in a New Zealand market. For example, it can result in a firm based in Australia being treated more leniently, in the way section 36A currently sits, than for firms based in New Zealand for identical conduct—that would affect New Zealand markets.

The bill changes the Commerce Commission’s authorisation powers as well. In some instances, anti-competitive conduct might be in the public interest. For example, it might be where competing businesses work together to aid in dealing with the effects of COVID-19. In these instances, it may be desirable to allow that behaviour, even though it might otherwise contravene the Act.

There are a number of changes which are in here. The National Party does have concerns about some parts of it. The National Party remains concerned about the effect on pro-competitive behaviour of the changes to an effects-based test under section 36 and the repeal of intellectual property safe harbours. National is concerned about the effect on pro-competitive behaviour that those changes could have, and the potential for resulting detrimental outcomes for consumers.

In terms of section 36, the bill changes competition rules for dominant market players from the intention to be anti-competitive to business decisions that have the unintended consequence of altering competition in the market. The National Party believes that this test should be amended from “intent (purpose), effect, or likely effect” to be anti-competitive to “intent (purpose), or likely effect”. The removal of the “effect” condition limits the restrictions to foreseeable consequences of commercial actions. As drafted, firms with market power risk liability for unforeseeable future consequences, leading to overly conservative decision-making on their part. This is likely to deter competitive conduct, to the detriment of consumers in the long term. We note that the regulatory impact assessment prepared by the Ministry of Business, Innovation and Employment supports this view.

It’s really important in bills of this nature to get the balance right so that we don’t have firms taking overly conservative decision-making, because we live in a dynamic world, as COVID-19 has made all too apparent. We have seen our borders closed for a very considerable period of time, and we need people to take risks in business to actually take advantage of the opportunities to look for new ways of doing things and to create new business opportunities for themselves, which is ultimately good for the country.

I just note that there is another concern that the National Party has in terms of the legitimate business justification. A legitimate business justification defence, in our view, should be included in section 36 of the Act, consistent with international precedent. While the Commerce Commission has assured us that they’ll not pursue proceedings against standard commercial conduct, this should be specified in the bill. The commission may not bring proceedings against legitimate businesses, but it does not preclude third parties from doing so.

The National Party opposes the repeal of the intellectual property safe harbours which are proposed in this bill. Businesses require confidence to invest in and license their intellectual property. So intellectual property rights have no intrinsic value; rather, the value lies in their statutory rights, that allow for the enforcement of intellectual property. Repealing certain safe harbours in this bill will make New Zealand an outlier internationally, discouraging investment in intellectual property and research and development, and will have a chilling effect on pro-competitive licensing of intellectual property to competitors and other third parties.

I’ll just make the comment here that this is an incredibly important area for New Zealand to compete in, with the weightless export potential for this market. It’s something where we should really be carefully ensuring that we create the relevant statutory regime that will support the development of intellectual property and that will encourage research and development. Increasingly, we see, for example, with matters around climate change and how to respond to that, that we need some intelligent thinking and we need some people who are taking a chance. I saw recently a speech by Mr Callaghan from about 10 years ago, where he noted that New Zealand is incredibly good at doing odd things. We have businesses where New Zealanders come up with ideas which are outliers that no one else has thought of, and this is the classic number eight wire thinking that is hardwired into our DNA. New Zealanders will look at something and find an opportunity that no one else has noticed, and they will do it very, very well, and sell it to the world markets. We don’t want to see a chilling effect on that innovation—that number eight wire spirit—but, rather, we want to encourage it, and unfortunately this bill undermines that.

So there are a number of concerns that we have in respect of this bill, but I think I’ll leave my comments there. Thank you for the opportunity.

Thank you, Madam Speaker. I rise in this House to support this bill and to commend this bill to the House because, unlike what the previous speaker has mentioned, in order to protect in New Zealand the innovation that we have here in this country, and to protect that good old “start in your garage” kind of mentality, we actually need really good competition law in our economy. We need to make sure that the smaller players don’t get bullied by the bigger players. We need to make sure that this economy is fair for everyone when they’re entering into it.

I would like to quote the chair of our Economic Development, Science and Innovation Committee, Jamie Strange, who said that competition breeds innovation, and that is exactly why we are legislating this bill. It’s because we need to make sure that New Zealand has a healthy competition environment within our economy.

Through the inquiries that we’ve done into supermarkets and the ones that we’ve announced for the building supply sector, we know that in a small economy like New Zealand, competition sometimes can be crowded out because of the lack of players or the small amount of players that we have in the small population and the market size that we have. So that’s why it’s super crucial that we get this bill right so that we make sure that we protect the smaller players, we protect the consumers, and we make sure that this economy still runs in the way that we want, which is for everyone to have a fair go so that everyone can achieve the wellbeing to live in this place.

I want to thank my select committee colleagues for the work that we’ve done together, collectively, on this bill and to thank the Minister for accepting our recommendations in terms of speeding up the delay that we had in the implementation of this bill. This was exactly something that the submitters had said to us, and this is us listening to the submitters and making sure that the implementation period for the transition of this bill is not only prudent in terms of giving time for everyone to adjust but also, at the same time, so that we actually make sure that we get the effect of this bill in the way that we want it to be. So, on that note, I commend this bill to the House.

Motion agreed to.

Bill read a second time.