Perhaps the most worrying aspect of the government’s surprise decision not to reappoint Paula Rebstock as Commerce Commission Chair, was the one-sided nature of whatever consultation preceded it.
Media accounts have concluded that her abrupt departure arose from lobbying by a small group of businesses with positions of market dominance that had been constrained by commission decisions, along with their legal advisers.
There appears to be no indication that the government consulted with the hundreds of businesses whose position had been improved by the constraints on large competitors abusing their market power, nor with the thousands who as customers, benefit from the newly competitive markets that the commission strove to facilitate.
The commission, under Rebstock, has done an excellent job. Businesses that have benefited in multiple ways, often without recognising the commission’s role, should be very concerned with her abrupt departure. Most of all, those telecommunications companies without market dominance, and large telecommunications users, should be on red alert.
In one of the first issues where this government has had bad press, the media have almost universally questioned the wisdom of her removal and replacement by Dr Mark Berry.
Writing in The Independent, Nick Smith and Jenny Keown commented that “economists, competition lawyers and telco industry spokespeople are deeply concerned that Berry’s appointment will lead to changes in the Commerce Act and a more hands-off approach in managing key industry sectors.”
They pointed to Berry’s close association with the New Zealand Institute of Competition and Regulation, which they described as “virulently anti-regulation and particularly opposed to the commission’s interference in the energy and telco industries.” They noted that the Institute is sponsored by companies that have been on the receiving end of the commission’s attention under Rebstock’s tenure.
The New Zealand Herald’s John Drinnan described Rebstock as “the incisive economist who rattled some of New Zealand’s most powerful business leaders”. Drinnan went on to say that her departure “signals a less activist commission”.
Duncan Bridgeman wrote in the NBR that “Dr Berry has more recently been a consultant at Chapman Tripp, the law firm that has been a leading lobbyist for radical reform of the Commerce Commission.”
Berry has been in the commission before, notably as deputy chairman. One of his actions in that role was to lead the commission panel that approved the authorisation of the infamous Number Administration Deed, against the advice of many including Clear, Sir Geoffrey Palmer and TUANZ. The Deed has not proved to be one of the industry’s high spots, a point acknowledged even by some who supported it at the time (to be fair, Rebstock was also a member of that panel of commissioners).
The changing of the guard at the Commission is not confined to the chair. Vice chairman Donal Curtin has recently been restored to membership, but stripped of the Vice chairman position after several months of sin binning arising from an issue around disclosure of interest.
Meanwhile, at the time of writing, telecommunications commissioner Dr Ross Patterson is still on leave of absence from which he was expected to return several weeks ago.
For telecommunications users, it is now Patterson’s fate that will be the crucial signal. His early return would provide some assurance that Rebstock’s departure does not foreshadow a major step back to the “hands off” bad old days. Conversely if he does not return, or if there is further delay, many will take this as an ominous sign.
There is a very serious message here for the government: the small cluster of very large businesses who enjoy market dominance is a skewed sample of business overall. Consulting those with an axe to grind, but not those whose work the commission benefits, is like running a survey about how people perceive the police, but only canvassing at Paremoremo prison.
A lot of water has gone under the bridge of competition law since 1999. In telecommunications especially, New Zealand has learned a lot from the success of the Telecommunications Act 2006 — it has opened up competition to the advantage of consumers and businesses, through far earlier availability of new technologies, better services and lower prices.
A return to the bad old days seems unthinkable. But the signal given by Rebstock’s departure is to be taken seriously. Many will be on high alert.