Under the Telecommunications Act 2001, we promote competition in markets including between mobile networks and retail service providers. For fixed line broadband services, we are also able to set maximum revenue limits and minimum quality standards in certain monopoly parts of the supply chain.
Part 4 of the Commerce Act applies to electricity networks, certain gas networks, and specific services in New Zealand’s three major international airports (Auckland, Wellington, and Christchurch).
The Electricity Authority is also responsible for promoting competition in the electricity industry including in generation and retail markets.
The Dairy Industry Restructuring Act 2001 (DIRA) was implemented to mitigate the risks to consumers from the formation of Fonterra, which resulted in a market share that is likely to give Fonterra significant market power in a number of domestic markets. Our main role under DIRA is to review Fonterra’s base milk price calculation each year, including a review of their milk price manual that sets out how they will calculate the base milk price.
Before a market can be regulated we must undertake an inquiry under Part 4 of the Commerce Act. This can be triggered either by the Minister of Commerce and Consumer Affairs, or we can choose to hold an inquiry ourselves.
When deciding whether to hold an inquiry, we will assess a number of things:
the levels of competition in a market (current and future)
the scope for suppliers to exercise market power
the effectiveness of any existing regulation of that market.
If we do decide to hold an inquiry, we will then assess competition and market power in that market, and whether the benefits of regulation would be greater than the costs.
After we have completed our inquiry, we must make a recommendation to the Minister, who will then decide whether or not to regulate.