Commerce Commission Chair John Belgrave said that the Commission doing its job effectively can mean making unpopular decisions.
Mr Belgrave was speaking to the Wellington Rotary Club and said that the Commission must, and always does, strive to be impartial in applying the law correctly and consistently. That means that, at times, it will make decisions that are unpopular.
He compared the Commission to the referee of a sport.
"A referee does not write the rules. A referee does not design the playing field, nor coach the players, and (unless, perhaps, you're playing rugby in South Africa) a referee does not pick winners," Mr Belgrave said.
"What the referee does is ensure that when the teams are on the field they obey the rules of the game, and he, or she, does that impartially
"In the sporting analogy, the referee does not tell the captain what tactics to use but he/she will stop illegal ones nor does it tell the club how it should organise itself. If the tactics are right the team has a better chance of winning the game. If the organisation is right the team has a better chance of winning the competition. And in the world of professional sport, a series of failures can mean the club does not survive.
"With such possible outcomes, the Commerce Commission is very aware that it must be impartial. At times, being impartial means it must make hard decisions like taking action against illegal tactics used by the home team, or ignoring complaints from a popular underdog being legally beaten by a team from a much bigger club."
The Commission's task is to enforce the Commerce, Electricity Industry Reform (EIRA) and Fair Trading Acts as they have been written by Parliament and interpreted by the Courts. It does not provide policy advice to the Government. That is done by the Ministry of Economic Development, the Treasury and the Ministry of Consumer Affairs.
Overall, the three Acts work to promote consumers' ability to choose what they do, or do not, buy or use. This is a vital part of healthy competition.
The Commerce Act prohibits anti-competitive collusion among competitors and anti-competitive behaviour by organisations that are dominant in a market.
Healthy competition among businesses encourages them to reduce prices to consumers, become more efficient, upgrade existing services and products, and develop new ideas.
The EIRA aims to prevent the owners of electricity line networks, which by their very nature are monopolies, from abusing that monopoly power. It does that by preventing them being involved in other electricity businesses.
When owners of electricity lines are not involved in other electricity businesses, then they have an incentive to encourage competitors to use the networks.
The Fair Trading Act prohibits false or misleading claims. Consumers choosing what they will or will not buy give strong messages to businesses about what they should offer and how it should be offered. Accurate information is important for consumers (without it they are ripped off) and for the economy overall. Competition should benefit businesses that produce better goods or services, not those producing the most convincing misleading information.
Copies of Mr Belgrave's speech are available from reception at the Commission's Wellington office, level 7, Landcorp House, 101 Lambton Quay.
Media contact: Communications Officer Vincent Cholewa
