British organisations see NZ competition law as "outstanding"
Published26 Nov 1996
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The Institute of Economic Affairs (IEA) and the London Business School (LBS) have described New Zealand as "the outstanding country for economy in regulation" and have invited Commerce Commission Chairman Dr Alan Bollard to present a paper about it in London.
Britain is looking at the way it regulates utilities - services like gas, electricity and telecommunications.
Dr Bollard was one of nine speakers at a lecture series organised by the IEA and LBS. He presented a paper, Utility Regulation in New Zealand, prepared by himself and Commission Chief Economist Dr Michael Pickford.
New Zealand's light-handed regulation of utilities is very different to Britain's much more regulated approach.
Also, New Zealand has one organisation, the Commission, that uses the Commerce and Fair Trading Acts to cover all industries, including utilities and both private and public sectors.
Britain has a large range of separate industry regulators as well as its Monopolies and Mergers Commission and the Office of Fair Trading.
"Most of the audience - senior people from companies, industry groups and the regulators - have a general idea of our system, but its details are new and exciting to them," Dr Bollard said.
His and Dr Pickford's paper summarises New Zealand's economic reforms, of which our current competition law, the Commerce and Fair Trading Acts, form part.
Commenting on the impact of that competition law, the paper states: "While it is very difficult to assess what benefits other options might have brought, the current policy has made major inroads into areas of monopoly power in a relatively short time, and starting from a former position of government ownership and heavy regulation."
Overall, when compared to other systems, New Zealand's light-handed regulation has low costs incurred by the Commission and courts, and low compliance costs incurred by businesses.
Some specific cases have involved high litigation costs. However, from a nation-wide point of view, these costs can be seen as an investment in resolving issues for the whole economy. The precedents set apply to competition law that applies to all sectors of the economy, not just to a law dealing with one industry.
The paper qualifies its comments by noting that New Zealand's system certainly appears to be working well but is relatively new and is still being developed and refined. For example, information disclosure rules have recently been introduced in the electricity industry. More time is needed before detailed comparisons can be made with other countries.
Dr Bollard said the paper is not intended to be a blueprint for Britain to follow.
"We have very different economies, and the path New Zealand has taken may not suit Britain," he said. "However, in Britain there is considerable interest in, and praise for, New Zealand's light-handed approach to utility regulation."
Media contact: Communications Officer Vincent Cholewa
