Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Commission opens consultation on dairy competition review


Commission opens consultation on dairy competition review


The Commerce Commission today released a consultation paper outlining its proposed approach, timeframes and scope for its review of the state of competition in the New Zealand dairy industry.

Commissioner Dr Stephen Gale said the Commission was now seeking submissions on its proposed approach.

“Our review will look at whether the regulations are helping or hindering the efficient operation of the New Zealand dairy industry. To do this we intend to examine how competition has developed since Fonterra was established and what it might look like in the future,” Dr Gale said.

The Commission has provided for two consultation periods during the review.

Submissions on the consultation paper are due by 10 July. The Commission will also conduct interviews with and request information from market participants during that period. The second opportunity for interested parties to provide feedback will be after the draft report is published in November.

“We are working to a tight timeframe and are asking submitters to raise all potential issues upfront to ensure we have the maximum time available to explore them before publishing our draft report,” Dr Gale said.

The consultation paper and terms of reference are available on the Commission’swebsite.

The Minister of Primary Industries requires the Commission to complete its report by1 March 2016.

Background
The Dairy Industry Restructuring Act 2001 (DIRA) requires the Minister of Primary Industries, in consultation with the Minister of Commerce, to request a report on the state of competition in the New Zealand dairy industry:

• when the DIRA market share thresholds in section 147 are met, or

• in the event that they have not been met by 1 June 2015, as soon as practicable after that date.

The report must provide an assessment of the state of competition in the dairy industry and, if the state of competition is insufficient, advise the Minister as to whether the market share thresholds should be reset and provide options for a pathway to deregulation (if any).

Section 148(3) of the DIRA requires the Minister to give notice within 90 days of receiving the report, of whether he intends to promote legislation that resets either or both of the market share thresholds specified in section 147 or to promote the adoption of measures that provide a transition pathway to deregulation, or to promote both.

These requirements were put in place because the regulatory regime under the DIRA was designed to be transitional in nature. It was intended to expire if and when the New Zealand dairy markets are sufficiently competitive.

The Act also contains provisions that have the purpose of advancing the efficient operation of New Zealand dairy markets by promoting:

• contestability in the market for farmers milk; and

• access by independent processors to raw milk and other dairy goods and services that are necessary for them to compete in dairy markets.

Contestability in the farm gate milk market and independent processors’ ability to obtain raw milk directly from farmers, are promoted by the DIRA’s requirement that Fonterra operate an open entry and exit regime.

The DIRA Raw Milk Regulations further require Fonterra to supply independent processors with up to 50 million litres of raw milk per independent processor, capped at a total of 795 million litres per season of the raw milk it collects. This provides a stepping stone for new processors and an ongoing source of supply for niche producers.

The Act also promotes the setting of a base milk price that provides an incentive to Fonterra to operate efficiently, while providing for contestability in the market for the purchase of raw milk from farmers. The Commission annually reviews Fonterra’s Milk Price Manual and its base milk price calculation.


ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Stats NZ: Unemployment Declines As Underutilisation Rises

The seasonally adjusted unemployment rate decreased to 4.7 percent in the March 2021 quarter, continuing to fall from its recent peak of 5.2 percent in the September 2020 quarter but remaining high compared with recent years, Stats NZ said today. ... More>>

ALSO:

Digitl: The Story Behind Vodafone’s FibreX Court Ruling

Vodafone’s FibreX service was in the news this week. What is the story behind the Fair Trading Act court case? More>>

Commerce Commission: Vodafone Found Guilty Of Misleading Conduct Over 'FibreX' Service

Vodafone NZ Limited has been found guilty of engaging in conduct that was liable to mislead consumers in relation to its FibreX branded broadband service. In a case brought by the Commerce Commission and heard last year, the Auckland District Court ... More>>


Westpac: Announces Strong Financial Result

Westpac New Zealand (Westpac NZ) [i] says a strong half-year financial result has been driven by better than expected economic conditions. Chief Executive David McLean said while the global COVID-19 pandemic was far from over, the financial effect on ... More>>

MYOB: SME Confidence In Economic Performance Still Cautious

New insights from the annual MYOB Business Monitor have shown the SME sector is still cautious about the potential for further economic recovery, with two-in-five (41%) expecting the New Zealand economy to decline this year. The latest research ... More>>

Tourism Industry Aotearoa: Trans-Tasman Bubble Benefits NZ

More people have entered New Zealand than have left since the opening of the trans-Tasman bubble, says Tourism Industry Aotearoa. Since the first flight from Australia to New Zealand took off from Sydney to Auckland on 19 April, the two-way Tasman travel ... More>>