Faafoi KrisCOMMERCE AMENDMENT BILLFirst ReadingHon KRIS FAAFOI (Minister of Commerce and Consumer Affairs): I move That the Commerce Amendment Bill be now read a first time. I nominate the Transport and Infrastructure Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 10 September 2018 to enable the new market studies function for the Commerce Commission to come into effect this year.As Minister of Commerce and Consumer Affairs I am committed to supporting a more competitive confident and productive business environment that delivers positive outcomes for all New Zealanders. Consumers should be at the heart of competition and consumer policy and this is why advancing the Commerce Amendment Bill to ensure that selected markets are delivering better outcomes for all New Zealanders is a priority. Although this bill has three parts which I will touch on shortly the ability of the Commerce Commission to undertake market studies is the key element of this bill. Market studies will ensure New Zealand consumers get fair and appropriate treatment by delivering information about how a market is functioning. I believe well-functioning markets are necessary to ensure the successful functioning of the broader systems that are engines for economic growth. These studies allow us to identify whether there are factors in a market that are standing in the way of appropriate competition and that may be preventing consumers from receiving a fair deal or prohibiting honest business practice. Enabling the Commerce Commission to carry out market studies will give us a better understanding of how certain markets are performing and whether there may be matters preventing or inhibiting good market performance. However as mentioned this bill is divided into three parts with two other amendments to the Commerce Act in addition to the market studies power. Firstly this bill changes the airports regulation regime under Part 4 of the Commerce Act. I have considered the outcomes of the Ministry of Business Innovation and Employment (MBIE) review into the effectiveness of the economic regulation regime for airports under the Commerce Act and MBIE's review and the two rounds of consultation with airports and airlines identified that while the regime had largely worked well to date there were some areas in the bill that could be improved. This bill makes a number of legislative amendments to strengthen the current information disclosure regime for airports under Part 4. The review found that there was not a compelling case for a move to stronger negotiate/arbitrate regimes as the current information disclosure regime had worked to constrain the market power of New Zealand's major airports. However I do consider some changes are necessary to make it easier to impose further regulation on the airports if the current regime is no longer effective at achieving the purpose of the regulation. In this area the bill will clarify the Commerce Commission's power to examine the effectiveness of the information disclosure regime in Part 4 when looking at the performance of regulated suppliers. It will also introduce a short-form inquiry process for investigating the need for additional regulation at the airports if they are not meeting the long-term interests of consumers. Finally in this area it will clarify that an Order in Council process can be used to impose additional regulation on regulated services at the three regulated airports that we have the moment. Taken together these amendments will strengthen the credibility of the regime and incentivise airports to act consistently with their Part 4 purpose which is to promote the long-term interests of consumers. Secondly as previously mentioned the bill introduces a competition study power known and referred to earlier as a market study power into the Commerce Act. This power will be exercisable by the Commerce Commission at its own discretion or on the discretion of the Minister of Commerce and Consumer Affairs where that is in the public interest. This new power will allow the commission to shine a light into markets that may not be working effectively and in the best interests of consumers. We have concerns in regard to some markets that appear not to be working as well as they should be for consumers and it is hoped that a Commerce Commission study will identify the causes of poor performance in these markets through the extension of this information-gathering power. The outcome of these studies may inform the Government on whether intervention is desirable and if so on what form that intervention may take. The previous Government supported market studies powers for the Commerce Commission though they insisted all proposals for a market study must first be signed off by the Minister of Commerce and Consumer Affairs. This Government is taking the politics out of the market studies power by giving the commission the ability to initiate the study if it deems it necessary in the best interests of the public. This bill also allows for the Minister of Commerce and Consumer Affairs to initiate market studies. However there are necessary checks and balances provided for to ensure market studies are used where there is a real need in the interests of consumers. The last aspect of the Commerce Amendment Bill relates to the alternative enforcement mechanisms available to the Commerce Commission in the Commerce Act. There are two main changes this bill proposes in this area. First it repeals the little-used cease and desist regime which was introduced some years ago. The regime was intended to be a quick and easy way for the commission to stop harmful anti-competitive conduct but in practice the regime has only been used once. With the commission choosing to rely on the use of High Court injunctions to stop harmful anti-competitive conduct in a quick and cost-effective manner it's now considered that the cease and desist power is not needed. The two cease and desist commissioners have not been called upon to make a decision since 2006. The second change in this area relates to the introduction of enforceable undertakings in the Commerce Act. Enforceable undertakings are legal instruments to provide for settlements of enforcement actions by the Commerce Commission. If a firm breaches its settlement the Commerce Commission can enforce the undertaking as if it were a court decision. Currently the commission can only enforce a breach of settlement as if it was a breach of a contract and not a substantive breach of the Act. So this will provide greater assurance that firms will keep to the settlements they reach with the commission. In summary I believe that this bill is a welcome step towards improving New Zealand's competition system. I'm particularly hopeful that the opportunities of the new market studies regime for helping to promote competitive markets will benefit all New Zealanders and promote honest business. As the Minister of Commerce and Consumer Affairs I'm committed to supporting a more competitive confident and productive business environment. Therefore I commend this bill to the House.