Clark DavidCOMMERCE AMENDMENT BILLFirst ReadingHon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): I present a legislative statement on the Commerce Amendment Bill.ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.Hon Dr DAVID CLARK: I move That the Commerce Amendment Bill be now read a first time. I nominate the Economic Development Science and Innovation Committee to consider the bill.The Commerce Act sets out the ground rules that enable businesses to compete on their merits. In so doing it ensures both that consumers benefit from competitive markets—as undoubtedly they do if a market is appropriately designed and appropriate to the circumstances—but also sets out the parameters within which businesses operate and are able to maximise the returns to their shareholders. It is critical that laws are up to date are functional and are fit for purpose. The Government has introduced changes to the Act around competition law and that's what I am speaking to today.The changes that are contained in the bill can be roughly summarised under four headings. The first of these is a strengthening of the provisions around the misuse of market power. So currently market power can be prosecuted by the Commerce Commission (ComCom) on the basis of developing a hypothetical model. That has proven very difficult in practice and what we are doing here with the bill today the Commerce Amendment Bill is bringing our law into line with what they do in Australia and that introduces a different kind of test for the abuse of market power by a dominant player in the market. So that bill reforms the provision to prohibit firms with substantial market power from engaging in conduct that has the purpose effect or likely effect of substantially lessening competition.The second thing which the bill does is it empowers the Commerce Commission to authorise any activities which may contravene this prohibition but which are indeed in the public interest and they will develop guidelines to that effect. But this bill empowers them to do that. Next the bill repeals the exemption in the Act for some intellectual property (IP) - related conduct. That really brings things up to date because it was thought previously that intellectual property law and competition law were essentially anathema and that intellectual property law should be protected from competition law. That is old thinking. It is now the view that is widely held that intellectual property law should also be subject to competition law where appropriate. Both of them are actually complementary because they encourage innovation and they encourage investment and those things of course are critical for business. Interestingly the existing provisions really have not been tested at law and are probably narrower in their scope than most people realise—in fact probably narrower in scope than most professionals realise. It may be the case that this change is not really tested at law either but it does bring it up to date with current thinking around intellectual property law.The next thing the bill does and the final really significant thing is to make some changes to improve the functioning of the Act. Those are actually more minor changes. They are things that I certainly won't speak at length to but of course it's good hygiene when you're tidying things up with a bill when you're making the changes like we're making with section 36 to look at what else needs to be done could benefit from being done to make the bill a better bill and the Act a better Act for the purposes that are laid out in it.Now I'm particularly delighted to see this bill progressing because I have a little bit of history with this. When I was the Opposition economic development spokesperson—quite some time ago—I did become concerned about section 36 issues as I sat on the Commerce Committee and heard stories about market power and certainly became concerned across different industries that market power was at times being used and was very difficult to address. At the time I went and spoke to some intellectual property lawyers and competition experts in large firms and came to a view myself that the Australian law was more fit for purpose than ours.Now this was quite some time ago. I ended up putting some of those people in touch with the Hon Clayton Cosgrove who I think at the time might have been our commerce spokesperson and he developed a member's bill along these lines to change section 36 of the Act to bring it into line with the Australian law. Now as it happens I don't think that was ever drawn from the biscuit tin. History will tell me or somebody in this House will tell me if I'm wrong but it certainly didn't become law. Now here I am as the Minister of Commerce and Consumer Affairs passing a law that does bring us into line with the Australian law setting that test in a way that will actually I think be more effective at ensuring that we do have a competitive market that will make sure that we get the benefits of that in terms of both the clarity for business so they can maximise their opportunity but also the benefits for consumers that accrue from having good competition in the market place.I do want to put on record my thanks to the previous commerce and consumer affairs Minister the Hon Kris Faafoi who has done the real heavy lifting here. He oversaw the review of the Commerce Act and that review has produced the main policy changes which we are considering here today in the House. That review included consultation in 2019 with business industry organisations competition and intellectual property specialists law firms and other bodies like the Commerce Commission and Consumer New Zealand. So I do want to acknowledge the hard-working Hon Kris Faafoi here in the House today.Now some concerns have been raised around the change in the IP provisions a fear that there might be some chill on competition and investment that could result in false positives. I have looked at this and I think these concerns personally are overstated. The reform prohibition should not suppress any innovations in business practices in concentrated markets that ultimately pose no threat to the competitive process. I want to acknowledge however those concerns acknowledge that probably the law as it was was much narrower than most people realise and again as I said earlier I find it quite likely that we won't even test these provisions because actually the two are often in harmony. Historically this hasn't become an area of debate at law. I'm also satisfied that the benefits of the change to economic performance and consumer welfare will outweigh any risks to incumbent firms.The other thing to say in that regard is that there will be an implementation period of 12 months and there will be ComCom guidance around that. So firms will be able to adjust any arrangements they do have as the law comes into effect.Ultimately I think people generally fair-thinking New Zealanders will be very pleased with the bill's passage. As I said at the outset the purpose of it is to ensure that businesses can compete on their merits. We want the kind of competition that enables firms to thrive that have the most innovative practices and products that do run their businesses well and do things that are in the interests of consumers. Having clearly spelt-out law describes the playing field in which they operate and ultimately those benefits from competition do accrue to consumers and that's about fairness—both fairness for the businesses in understanding the environment knowing where they've got to put their efforts but also fairness of course for consumers themselves who deserve to have products available that are at the best price and the best quality across the board.So I will end my contribution there other than to say how delighted I am to be taking this section 36 change through which is the main part of the bill; to note the IP changes; and also to note again the ability of the Commerce Commission where they have any concerns about section 36 to authorise any activities that may contravene the prohibition on the use of market power that might be deemed to be in the public interest and there will be guidance developed around that as well. Thank you very much for the opportunity to speak to this bill and I commend it to the House.