Commerce Commission Stakeholder Briefing 17 and 19 June 2014 Brent Alderton, Chief Executive
Agenda • Setting the scene • Performance highlights • Key areas of focus going forward • Work programme • Questions 2
The benefits of competition Competition is a key driver for delivering greater productivity and growth. Effective competition creates an incentive for firms to: • Innovate • Improve efficiency • Produce products and services at a price and quality demanded by consumers There are significant economic benefits from effective competition. 3
Our impact An effective competition agency and regulator helps to ensure: • There is a level playing field for competitors. The rules are known and players are monitored • Market power is not abused • The level of competition in a market is not substantially lessened by amalgamation • Prices are set by effective competition or regulation • Consumers are protected • Regulated businesses face incentives to perform, invest and provide long-term benefits for consumers 4
Commerce Commission Dr Mark Berry Chairman
Assessing consumer harm A new work programme that is proactive, intelligence-led, and evidence based Identify the sectors, industries and traders that are causing the most consumer harm through non-compliance Focus our efforts where we can have maximum impact, and protect vulnerable and disadvantaged consumers 6
Assessing consumer harm Planning tool to align our work programmes to areas of greatest consumer harm • screening of complaints • case selection for investigation • education and advocacy Identify problems requiring proactive and targeted effort Major Trader programme to address the small number of traders causing a disproportionate level of harm Measure impact 7
Assessing consumer harm Develop communities of interest among consumer groups Agencies who have contributed information to date: Ministry of Business, Innovation and Employment The Insurance and Savings Ombudsman The Banking Ombudsman Financial Disputes Resolutions Services (now known as FairWay Resolution) Financial Services Complaints Limited The New Zealand Federation of Family Budgeting Services Consumer NZ Federal Trade Commission Australian Competition and Consumer Commission Potential for NZ wide assessment on consumer harm 8
Performance highlights Consumer Love Springs case Credit SaILS – almost $60 million returned to investors Getting in early to prevent harm – DealSave and daily deal sites Compensation for consumers - $5,113,228 Penalties of $1,861,200 9
Performance highlights Competition Construction microsite launched Increase in leniency applications and action against cartels • Air cargo case - $43 million in penalties • Freight forwarding case - $12 million in penalties 10 merger applications processed YTD NZ ranked 5 th = in the world 10
Performance highlights Regulation Input methodologies – merits appeal judgement UBA case Orion’s customised price -quality path Airport reviews Review of Fonterra’s price manual 11
Looking forward Consumer Consumer credit – protecting the vulnerable Law reform Interventions that stop harm Engagement Interest rate swaps case 12
Looking forward Competition Cartel investigations – domestic focus On-going investigations – plasterboard, parking, supermarket Section 36 Continued focus on construction 13
Looking forward Regulation UBA and UCLL final pricing principles Weighted average cost of capital (WACC) Price-quality paths for electricity distribution and Transpower Ensuring incentives for performance in regulated industries Predictability Engagement 14
Summary Large work programme focused on: • Interventions that stop harm • Incentives for performance in regulated industries • Implementing legislative change • Predictability • Taking the right time to reach a conclusion • Engagement • High quality work 15
Questions Mark Berry – Chairman Sue Begg – Deputy Chair Stephen Gale – Telecommunications Commissioner 16
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