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Commerce Commission (International Co-operation, and Fees) Bill — First Reading


Commerce Commission (International Co-operation, and Fees) Bill

First Reading

Hon SIMON POWER (Minister of Commerce) : I move, That the Commerce Commission (International Co-operation, and Fees) Bill be now read a first time. At the appropriate time I intend to move that the bill be referred to the Commerce Committee for consideration.

This bill proposes reform, and it proposes amending the Commerce Act, the Fair Trading Act, and the Credit Contracts and Consumer Finance Act to enable greater cooperation between the Commerce Commission and its fellow overseas competition and consumer regulators. This bill is part of the single economic market outcomes framework, which was jointly announced by Prime Ministers Rudd and Key in August last year. As Mr Key said in his Prime Minister’s statement to the House at the beginning of this year, this Government wants to give the single economic market a new impetus this year. The Australian Government passed legislation in 2007 to enhance the ability of the Australian Competition and Consumer Commission—the ACCC—to provide assistance to overseas regulators.

Hon Lianne Dalziel: The bill was introduced when?

Hon SIMON POWER: I am getting there. Just to satisfy my colleague the Hon Lianne Dalziel, the next sentence in my speech states: “This bill was introduced by the previous Minister of Commerce immediately prior to the election in 2008.”

Hon Lianne Dalziel: What took you so long?

Hon SIMON POWER: It took me three paragraphs.

Hon Lianne Dalziel: No, we are just getting to the first reading.

Hon SIMON POWER: We do not want to be too bipartisan about these things!

Chris Hipkins: But 18 months?

Hon SIMON POWER: I have been busy.

The bill provides for the Commerce Commission to use its statutory powers to assist the Australian Competition and Consumer Commission, and other overseas competition or consumer regulators, with an investigation. The bill will promote more effective and efficient enforcement of competition and consumer protection laws in a global economy. Business today increasingly operates in multiple jurisdictions, and parallel investigations or proceedings in relation to a particular company are becoming increasingly common and complex. For example, recent international cartel cases that the Commerce Commission has pursued, or is pursuing, include cartels relating to cardboard, wood chemicals, gas-insulated switchgear, and air cargo. The first two have a trans-Tasman element to them, and the latter two are concerned with wider global coordinated activity. Effective enforcement in the global economy means that the Commerce Commission not only needs to be vigilant but also needs to be able to provide assistance to, and obtain information from, other overseas regulators.

This bill complements the Trans-Tasman Proceedings Bill, which is currently before the Justice and Electoral Committee. That bill seeks to implement the agreement on trans-Tasman court proceedings and regulatory enforcement, which, again, was signed by the previous Minister of Justice in July 2008. The Trans-Tasman Proceedings Bill aligns the process for resolving trans-Tasman civil disputes, and therefore dovetails with the purpose of this bill, which aims to facilitate mutual assistance from the investigative stages through to enforcement proceedings in competition and consumer law cases.

This bill requires a cooperation arrangement between Governments to be in place before any compulsorily acquired information or assistance can be provided to an overseas regulator. A cooperation arrangement will enhance the commission’s ability to obtain assistance from overseas regulators in two ways. First, it will help the Commerce Commission to obtain information gathered by overseas regulators during their own investigations that is relevant to a competition or fair trading investigation in New Zealand. In return, the Commerce Commission can reciprocate by responding to similar requests from overseas regulators. Second, the bill will allow the Commerce Commission to ask overseas regulators to gather information in their jurisdictions on the commission’s behalf.

Since the bill was tabled some time ago, feedback has been received that questions whether the Government to Government cooperation arrangement should be the only means for overseas regulators to access investigative assistance from the Commerce Commission. For example, one alternative could be to provide for Ministerial approval of a regulator-to-regulator arrangement, subject to specific safeguards being met. I would like to invite the select committee and submitters to consider this specific matter. It is important to note that the bill provides safeguards for New Zealand interests, including requirements to consider such matters as the nature of relevant overseas competition or consumer protection laws, any relevant privacy issues, and the framework in the overseas jurisdiction for dealing with what will generally be sensitive information. Those safeguards will ensure that compulsorily acquired information and investigative assistance are provided and used only for an authorised purpose.

One of the key expectations underlying a cooperation agreement is that of reciprocity, to ensure that the arrangement will result in benefits to New Zealand. To promote transparency, the bill also sets out publication requirements for cooperation arrangements. I am interested in hearing from the public through the select committee process as to whether the bill should contain explicit provisions to deal with national-interest considerations, particularly in relation to foreign policy.

The bill also sets out requirements that the Commerce Commission must take into account before providing investigative assistance or compulsorily acquired information to an overseas regulator. Those matters reflect the intention to ensure that the requested assistance or sharing of information relates to a proper and authorised purpose. The bill requires the Commerce Commission to obtain written undertakings from the overseas regulator that such information will not be used against the person who provided the information in criminal proceedings in the overseas jurisdiction. The bill also requires the commission to notify parties to whom compulsorily acquired information relates as soon as practicable after it has provided such information to the overseas regulator. However, such notice will not be required if the Commerce Commission considers it would compromise the commission’s or the overseas regulator’s investigation, or if it would be impractical.

Access to material that is privileged, such as draft witness statements and other court documents, often has the potential to have a significant impact on investigations or proceedings. The bill provides for the protection of privileged documents that the commission may provide to an overseas regulator, and vice versa.

The bill also makes changes to the regulation-making powers in the Commerce Act in order to require refunds for clearance and authorisation application fees, and for fee exemptions to be made for small to medium sized enterprises. I further invite the select committee to consider whether alternatives to fee exemptions would be more appropriate, such as providing for a tiered system of fees.

Ultimately, this bill is about ensuring that the Commerce Commission has the appropriate range of tools to effectively detect, investigate, and enforce New Zealand competition and consumer protection laws in global markets, whilst ensuring there are safeguards in place to protect the New Zealand public interest. It is in the interest of consumers and businesses alike that regulators cooperate with one another and coordinate their efforts where possible, particularly as we strive for a single economic market. I commend this bill to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East) : I am pleased to follow the Minister of Commerce, Simon Power, and to indicate that Labour will support the referral of the Commerce Commission (International Co-operation, and Fees) Bill to the Commerce Committee, where I am sure we will enjoy the opportunity to take up the challenges that the Minister has recommended to us tonight. It is interesting because, of course, I think it was back in 2006 that I signed a memorandum of understanding with Peter Costello, the then Treasurer of Australia, that was the background to the introduction of this particular measure.

The bill was introduced into the House just prior to the 2008 general election. Although I have expressed some disappointment that it has taken a while for the bill to get to its first reading prior to referral to the select committee, I will acknowledge the Minister for perhaps adding some value, in the time that he has had—

Hon Member: Greaser!

Hon LIANNE DALZIEL: —no, no—to look at this bill. That added value comprises the two specific issues that the Minister has asked the select committee to look at. When I was a Minister, I always enjoyed inviting a select committee to look at an issue on which I did not have a particularly strong view one way or the other, and I appreciate it when that invitation is reciprocated.

One of the two issues, I understand, relates to whether it ought to be a requirement to have a full cooperation arrangement, Government to Government, as the basis for the sharing of information and investigative assistance with the overseas regulator. The issue is whether it is necessary for such an arrangement to be in place, or whether something that does not require a Government to Government arrangement—a lesser form of arrangement—might be looked at. I will be really interested, as we go through this process, to perhaps hear a little more about why that might be a better approach. I certainly do not have a closed mind to it, and it is certainly something that we look forward to considering.

The other issue that I think I heard the Minister refer to was an alternative to exempting a class or classes of persons from the requirement to pay any fee prescribed for an application. That provision is under Part 2, “Fees”, where clause 13 of the bill amends section 108 of the Commerce Act 1986 by inserting paragraph (cd). That is interesting, because when I was working on this issue I was still the Minister for Small Business, and at every opportunity I could take I was looking for ways to make compliance costs more manageable for the small to medium sized enterprise sector, while also recognising that sometimes compliance costs could be disproportionate when dealing with a smaller entity that simply did not have the economies of scale of some of the larger entities. So the idea of having an exemption by regulation written into the legislation seemed to be a fair way of allowing for that to occur, but also of allowing for adjustments to be made over time. The concept of having a tiered approach may perhaps be a better way of doing that. Again, I do not have a closed mind to that; I do not have a strong view one way or the other. It was probably not a defining feature of the legislation as introduced to the House, but it is certainly something that we will look at in the select committee.

The Minister said that the Australian Government passed legislation in 2007 to enhance the Australian Competition and Consumer Commission’s ability to provide assistance to overseas regulators, so Australia is ahead of the game. I know that the Minister has taken the opportunity to reinforce the fact that the single economic market is totally the current Government’s idea, but I tell the House that we were working on the single economic market agenda prior to the 2008 general election. I worked very closely with Michael Cullen on it, which is why I as the then Minister of Commerce signed a memorandum of understanding with the Australian Treasurer as part of the discussions about the single economic market agenda. It necessarily involved me in my role as the then Minister of Commerce on this side of the Tasman.

As I think the Minister has already pointed out, the idea of the bill is to provide for the Commerce Commission to use its statutory powers to assist an overseas competition or consumer regulator with an investigation. It also sets out how the commission can share compulsorily acquired information in order to assist overseas competition and consumer regulators. It is obvious why we want to go down that track. The harm that anti-competitive and unfair trading practices can inflict not just on an economy but also on individuals is significant. I think that when we recognise that businesses today increasingly operate in multiple jurisdictions, and that parallel investigations or proceedings in relation to a particular company are becoming increasingly common and complex, it makes very good sense to open up the regulators. As long as there is trust regarding the quality of the treatment of the information that is provided, I think that can only strengthen the work that we want to do internationally in the areas of anti-competitive and unfair trading practices.

I note, in the merger context, that over the 2 years immediately preceding the introduction of this bill, of the 43 clearance decisions made by the Commerce Commission, 29 of them involved proposals where at least one of the parties was an overseas company. In the fair trading area, many cases have also had an international dimension. One example that I was given at the time included suppliers that were based abroad making false and misleading claims for goods or services offered over the Internet. We have seen real growth in that industry, and enhancing the capacity of our regulator to engage in a collaborative way with international regulators in terms of some of these international suppliers would strengthen the protection available to New Zealand consumers and consumers in other countries, as well.

I have noted that the New Zealand Commerce Commission has a pretty good track record in terms of hunting down some of the cartel behaviour that has, unfortunately, flourished. Particularly at times when finance is tight, we see a greater incidence of cartel behaviour. If we recognise that New Zealand cannot do it on its own when it is dealing with cartels that operate internationally, then it is very important to see those tools strengthened for our regulator and for international regulators, as well.

I support the Minister’s comments. He essentially said he was confident that the provisions in the bill would provide a mechanism to enable genuine in-depth cooperation between the Commerce Commission and equivalent overseas regulators. It does this whilst ensuring that appropriate safeguards are in place to protect the New Zealand public interest. I think that is a strong message to give to Parliament in relation to this important legislation, and I can see how excited everyone in the House is to finally see it being debated for the first time. I look forward to receiving the bill at the select committee and to hearing submissions on it, particularly on the points that the Minister has raised. We will support the bill.

PESETA SAM LOTU-IIGA (National—Maungakiekie) : I also rise to support this bill, along with the Minister and the chairperson of the Commerce Committee. The proposals in the Commerce Commission (International Co-operation, and Fees) Bill are part of the single economic market outcomes framework, which was announced to great acclaim last year by the Prime Ministers of both New Zealand and Australia. As has already been stated by the previous speaker, it enables greater cooperation between not only the Commerce Commission in New Zealand and its Australian counterpart but also other regulators in foreign jurisdictions.

I will not traverse the points made by Lianne Dalziel, but I do welcome the points raised by the Minister in terms of the areas that we need to scrutinise and investigate. It really is about giving the single economic market between New Zealand and Australia a new impetus. Our ambition, certainly for this Government, is that New Zealand companies can do business as easily in Australia as they can at home, and vice versa. The easier we make it for these companies to operate in both countries by removing unnecessary barriers, the greater the opportunities for businesses to make big productivity gains and take up new opportunities that will underpin our long-term growth. Of course, what is important with our relationship with Australia is not just the types of relationships we have over time in terms of the Anzacs and sporting relationships but also that for many of our businesses Australia is the first stop. For many of our businesses that look to expand into overseas markets, Australia is the first port of call.

  • Debate interrupted.