Commerce Commission Stakeholder Briefing 17 and 19 June 2014 Brent - - PowerPoint PPT Presentation

Stakeholder Briefing

17 and 19 June 2014

Brent Alderton, Chief Executive

Commerce Commission

Agenda

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• Setting the scene
• Performance highlights
• Key areas of focus going forward
• Work programme
• Questions

The benefits of competition

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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.

Our impact

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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

Dr Mark Berry Chairman

Commerce Commission

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

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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

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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

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Performance highlights

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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

Performance highlights

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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 5th= in the world

Performance highlights

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Regulation Input methodologies – merits appeal judgement UBA case Orion’s customised price-quality path Airport reviews Review of Fonterra’s price manual

Looking forward

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Consumer Consumer credit – protecting the vulnerable Law reform Interventions that stop harm Engagement Interest rate swaps case

Looking forward

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Competition Cartel investigations – domestic focus On-going investigations – plasterboard, parking, supermarket Section 36 Continued focus on construction

Looking forward

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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

Summary

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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

Questions

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Mark Berry – Chairman Sue Begg – Deputy Chair Stephen Gale – Telecommunications Commissioner