2001: The Year To Come For The Commerce Commission

Commerce Commission Chair John Belgrave said today that this year the Commission has six issues on which it will focus special attention, in addition to continuing its general enforcement of the Commerce, Fair Trading and Electricity Industry Reform Acts.

Mr Belgrave said that the six issues are: * developing its new responsibilities in the telecommunications industry * developing its new responsibilities in the electricity industry * revising its Business Acquisitions Guidelines in line with amendments likely to be made to the Commerce Act * focusing enforcement action against anti-competitive collusion among competitors * focusing enforcement action against false or misleading claims made by real estate agents, and * focusing enforcement action against false or misleading claims made by car dealers.

New responsibilities

"The Government's proposed telecommunications and electricity regulations will involve work that has never been done before in New Zealand," Mr Belgrave said.

"We have been looking at how overseas regulators operate in applying their laws, and will continue working closely with all the relevant interests, including consumers, as we develop our own processes.

"The Commission believes that for the new regimes to be successful, they must be well-understood by those subject to them-the companies-and by those for whose benefit they exist-consumers."

Business acquisitions Commerce Act amendments

The Commission is aware that there are considerable advantages for the whole economy in businesses understanding the Commission's business acquisitions rules and how they will be applied in the context of the proposed amendments to the Commerce Act.

The Commission aims to help reduce uncertainty about what might be the effects of amendments to the business acquisitions provisions of the Commerce Act. It published a discussion document in November last year, and will revise its Business Acquisitions Guidelines when the amendments are made.

The Business Acquisitions Guidelines describe when the Commission will consider challenging an acquisition, when it is advisable for parties to apply for clearance or authorisation and what the Commission will look at in making decisions on acquisitions.

Collusion

"Collusion among competitors is fundamentally anti-competitive," Mr Belgrave said. "It reduces, or even eliminates, customers ability to choose-less competition is less choice.

"One effect of collusion can be increased prices. It does not matter if the collusion is about prices, against a rival business, about sharing out a market among each other, or any other form of anti-competitive agreement. Its effect is to benefit those colluding at the direct expense of their customers.

"There are two difficulties in taking action against collusion.

"First, it is usually done in secret. We are very interested in receiving any information about any kinds of formal or informal agreements among competitors. Complainants identities are treated strictly confidentially. In addition, we have a leniency policy for whistleblowers, but this applies only if information is provided before we start an investigation.

"Secondly, some business people still do not understand that working with a competitor in any way can put them at risk of breaking the law. 'Gentlemen's agreements' at the expense of customers are not acceptable. If people are unsure of the difference between legitimate co-operation and illegal collusion, then they can get information about what the law says from the Commission and should get their own legal advice about their own specific behaviour."

Real estate and cars

Areas of particular concern for the Commission under the Fair Trading Act are false or misleading claims about real estate and cars.

"The family home is the biggest purchase most consumers will make," Mr Belgrave said. "And their car will probably be their second biggest.

"Unfortunately, these are also the industries about which we still receive most complaints. Until last year we put considerable effort into education through trade associations, seminars, publications warnings and settlements. Complaints did not decrease and the Commission has moved from education to court action.

"Four car dealers have now been prosecuted and fined. The real estate crackdown started with its first prosecution in December.

"Investigations and enforcement action will continue until compliance improves."

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