System’s fitness for purpose
System performing well against criteria
New Zealand’s competition law and regulation is well regarded internationally which is reflected in international comparisons such as the WEF Global Competitiveness Index and the IMD Competitiveness Rankings. However, like other small and remote economies, New Zealand experiences lower levels of competitive intensity than larger countries or countries located in close proximity to other countries. Fully counteracting New Zealand’s size and distance disadvantages through competition law or other public policy avenues is likely to be unachievable, but an ongoing focus on: maintaining high quality competition law and institutions; competitively neutral government trading and procurement; and minimising domestic and international barriers to competition, is likely to deliver the best long term outcomes for consumers. The addition of a market studies power for the Commerce Commission and moving international shipping into the Commerce Act support this overall strategy.
In markets with little or no competition, the economic regulation provisions in Part 4 of the Commerce Act 1986 are delivering outcomes similar to those in competitive markets following a considerable bedding-in period. The regulatory framework is now well understood by industry and investors. For this reason, the Part 4 regime will form the basis of a new regime for regulating fixed line telecommunication services. The Commerce Commission participates in the Council of Energy Regulators to promote effective coordination of regulatory efforts across the competition and energy regulatory systems.
Despite the controversy that often surrounds individual regulatory decisions, the Commerce Commission is highly regarded internationally and is respected by domestic competition and regulatory experts. These findings were reflected in the regulatory system assessment completed in 2015.
The competition regulatory system and its processes are generally well understood by stakeholders despite the inherent complexity in some of its components.
Recognising the strong impacts system regulatory decisions can have on firms and sectors in the New Zealand economy, the competition system puts a premium on getting the best possible decision through strong accountability/decision review mechanisms and consultation processes. This does have timeliness and cost trade-offs for some regulatory decisions, but multiple evaluations suggest stakeholders do not believe the balance between quality and timeliness/cost should be altered.
Funding for the Commerce Commission is a generally a fraction of comparable overseas jurisdictions, but the outputs delivered are of a high quality based on international rankings of competition and economic regulators. The Commerce Commission completed a self- assessment in 2015 using the State Service’s Commission’s Performance Improvement Framework.
System has some issues against criteria
The competition regulatory system takes a principle based approach and has stood up well to recent technological and market developments. While ongoing evaluative and environmental scanning is required for effective regulatory stewardship, there are no obvious immediate issues threatening the efficiency, or effectiveness of the system. However, the emergence of the digital economy, changing inward and outward trade flows, and greater integration of international supply chains is increasing complexity of some clearance and authorisation decisions is likely to see the time taken to assess these applications continue to extend consistent with the experiences of comparable regulators in other jurisdictions. In the economic regulation area, the impact of emerging technologies on the electricity market is likely to be an area requiring ongoing monitoring and evaluation to ensure the current regulatory settings are able to deal with any different industry and market structures.
Fairness and accountability
System performing well against criteria
Independent decision making and substantive decision review and accountability mechanisms are hard-wired into the regulatory system. A substantial amount of clear and detailed guidance about the operation of the regulatory system is published by the Commerce Commission. The Commerce Commission processes are recognised as being open and highly transparent through the use of conferences for interested parties and the publication of issues papers and draft decisions where submissions are sought. The Commission also undertakes regular reviews of its processes and guidance material to support ongoing improvement. We see these kinds of evaluations as making a significant contribution to the ongoing health of the competition regulatory system.