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Commission warns Baycorp after fee investigation

Media Release

Issued 19 May 2006/131

Commission warns Baycorp after fee investigation

The Commission has completed its investigation into allegations of anti-competitive behaviour by Baycorp Advantage Holdings (NZ) Ltd (Baycorp), issuing Baycorp with a formal warning for a potential breach of the Commerce Act 1986.

In October 2001 Baycorp introduced a $5 fee, payable by independent debt collectors when they loaded default information into Baycorp’s credit reporting database. At the time the fee was introduced, Baycorp operated the only credit reporting database, as well as operating a debt collection business in competition with independent debt collectors. Independent debt collectors would ordinarily load information into the database, increasing the likelihood that an outstanding debt would be repaid.

The introduction of the fee had the effect of deterring debt collectors from loading information into the database. This meant that Baycorp's own debt collection business would have a competitive advantage over other debt collectors.

The Commission’s view is that the introduction of the fee was a prima facie breach of s36 of the Commerce Act and warned Baycorp of this view. On 31 August 2004 Baycorp advised the Commission that it had introduced a waiver scheme, allowing debt collectors to load default information for free.

A change in behaviour is not necessarily enough to stop the Commission taking action where there is evidence that a company has breached the Act. However, the Commission decided in this instance to limit their action to a warning after Baycorp introduced its waiver scheme.

Section 36 of the Commerce Act 1986 prohibits a person or business with a substantial degree of market power in a market from taking advantage of their market power to prevent competition either in that market or in any other market.


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