"Preparatory work by the Commission over the last 12 months has laid the foundations for the new regulatory and enforcement responsibilities the Commission has within several of New Zealand's most significant markets - electricity, telecommunications and dairy."

Legislation this year means the Commission has acquired responsibilities under the Dairy Industry Restructuring Act 2001 and the Telecommunications Act 2001.

In addition, the Commission has new and changed responsibilities under the Commerce Act 1986 to implement a regulatory regime in the electricity market, and to enforce new thresholds for business acquisitions.

"In 2001, the Commission completed specific preparatory work in these areas so that the regimes could be put in place as soon as practicable following enactment," said Ms Rebstock.

The preparatory work in 2001 included:

  • releasing Practice Note 4 explaining the Commission's approach to the changed threshold for business acquisitions under the amended section 47 of the Commerce Act;
  • publishing Compliance outlining the Commission's role and responsibilities under the Dairy Industry Restructuring Act;
  • appointing industry experts to assist with four critical projects required by the Telecommunications Act and releasing a discussion paper on the Commission's approach to it role within the telecommunications regime; and
  • releasing a paper on the Commission's approach to the valuation and audit of large electricity lines business as part of the recalibration project to be completed by 31 March 2002.

During this period the enforcement and adjudication work of the Commission has been growing.

Ms Rebstock explained: "The Commission received a significant number of clearance applications for business acquisitions during the year, likely due to the change in the threshold for considering the acquisitions, plus the concern of many parties to register applications before the change was enacted. Since then, the number of clearance applications received has remained high."

Another major activity was the Commission's release of a draft report on airport price control followed by a nine-day public hearing in September. The Commission is to finalise its report for the Minister of Commerce by 1 August 2002.

Major litigation in 2001 included:

  • Auckland High Court finds Giltrap City Toyota and employee Andrew MacKenzie guilty of price fixing (Giltrap and Mr MacKenzie have appealed the decision);
  • Commerce Commission commences court proceedings against British American Tobacco over a worldwide merger; and
  • Court of Appeal upholds Commerce Act breach by Carter Holt Harvey Building Products Group Limited for anti-competitive behaviour against a small South Island rival, New Wool Products Limited.

Areas of particular concern under the Fair Trading Act in 2001 were general retailing, food, telecommunications, e-commerce and computing, electricity, motor vehicle sales and real estate.

Fair Trading cases in 2001 included:

  • Weedons Poultry Farm fined $35,000 for misleading claims about "free range" eggs that were actually from battery hens;
  • Mitre 10 fined $13,500 for false claims about prices;
  • John Monk Trading fined $12,000 for importing more than 1,500 dangerous toys;
  • defunct computer retailer Gateway fined $21,000 for misleading advertising;
  • CLEAR Communications/Z Free fined $15,000 for not disclosing to customers outside the local free calling area that they had to pay toll charges to access the service;
  • Quantum Prestige Limited fined $17,500 for substantial untruths in advertising; and
  • DB Breweries and New Zealand Breweries both acknowledging Fair Trading Act breaches for misleading labels on beer products.

Organisational change in 2001 included the appointment of two Commissioners, Peter JM Taylor and Denese Bates QC, and two Associate Commissioners, Donal Curtin and Dr Donald Gilling.

Commissioner Paula Rebstock was appointed Deputy Chair, replacing Dr Mark Berry. Mr Douglas Webb was announced as the Telecommunications Commissioner, commencing in March 2002.

In preparation for its major new responsibilities and a significant increase in staff numbers, the Commission implemented a new organisational structure, creating five senior management positions to lead the Commission's core branches - Business Competition, Fair Trading, Legal, Economics and Corporate Services.

"The Commission welcomes the challenges ahead and will continue to balance the use of resources across the breadth of its activities in order to achieve the greatest benefit for competition, consumer choice and efficiency," said Ms Rebstock.

Media contact: Communications Manager Jackie Maitland Phone work (04) 498 0920, cellphone (025) 249 3407