Commerce Commission releases draft determination

Commerce Commission releases draft determination on New Zealand Electricity Market authorisation application

The Commerce Commission has today released a draft determination in relation to an application by The Marketplace Company Limited, the market administrator of the New Zealand Electricity Market (NZEM). The application was for authorisation of an arrangement that would require, after a delay of 14 days, the disclosure of bids to purchase electricity and offers to sell electricity through the NZEM. Bids and offers are currently disclosed after a delay of four weeks.

The application stemmed from the findings of the post 2001 Winter Ministerial Review into the operation of the wholesale electricity market. As a result of the review, the Government amended its policy to require disclosure of bids and offers after 14 days. However, participants in NZEM raised concerns that such disclosure may be anti-competitive because it would allow them to gain more knowledge of each other’s pricing strategies. These concerns resulted in the application for authorisation.

On the basis of the information available to date, the Commission has reached the preliminary view that the disclosure of bids and offers in NZEM after a delay of 14 days will not lessen competition in the wholesale electricity market.

As a result, the Commission considers the proposed arrangement does not require authorisation under the Commerce Act and therefore does not have jurisdiction to authorise it.

The Commission now invites industry participants and other interested parties to make written submissions on the draft determination. The closing date for submissions is Monday 18 November 2002. The Commission does not propose to hold a conference on the matter.

Background

The Commerce Act prohibits competitors agreeing to work together in a way that reduces competition between them. However, the Act does allow for the Commission to authorise potentially anti-competitive business practices if the public benefit is greater than the lessening of competition.

The draft determination is available on the Commission’s website, http://www.comcom.govt.nz.

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