The major tourist boat operators at Milford Sound and the Department of Conservation (DoC) have changed a deed because the Commerce Commission was concerned it may breach the Commerce Act.
Commission Chairman Dr Alan Bollard said that the Commission's view was that the deed between DoC and the Milford Sound Development Authority Ltd (MDA) effectively prevented other tourist boat operators competing with MDA's main shareholders, Fiordland Travel Ltd and Tourism Milford Ltd, at Milford Sound. Fiordland Travel and Tourism Milford each own 49 percent of MDA.
The three companies and DoC have settled with the Commission, giving signed undertakings not to give effect to the clauses in the deed that concerned the Commission because of their anti-competitive effect.
These clauses effectively:
· prevented other companies running short sight-seeing trips - these are the most popular for tourists at Milford Sound
· limited other companies to carrying less than 50 passengers per trip
· prevented other companies selling food, drinks and souvenirs from the visitor centre
· required other companies to operate 365 days each year
· limited other companies to a "development zone" where the facilities were controlled by MDA
Fiordland Travel and Tourism Milford operate tourist boats on Milford Sound.
The deed did not prevent other operators getting concession licences from DoC, but did put more restrictions on them than applied to Fiordland Travel and Tourism Milford.
Dr Bollard said it is important to note that the Commerce Act does not require DoC to offer a concession to any company that wants to operate in a National Park or any other kind of reserve.
"The Act does not say you must do business with everyone who comes to you," he said. "It does allow DoC to use conservation reasons to say 'no'.
"But, in this case, conservation was not the major issue for restricting competition. DoC wanted better facilities developed for the increasing number of visitors to Milford Sound. Fiordland Travel and Tourism Milford wanted to stay in the tourism business there.
"The problem was the way they went about it. In our view, the deed may have breached the Commerce Act because it substantially lessened competition and was a way for competitors to work together to exclude and restrict rivals."
Dr Bollard said there is a message here for all central and local government bodies that have power to grant concessions, licences or other rights. If they are in trade, the Commerce Act then applies to them and they must not act anti-competitively.
They do not have to grant a concession to every organisation that wants one. However, the way they allocate concessions must not substantially lessen competition. In addition, their reasons for saying yes or no must be based on the legislation that empowers them, and not be an attempt to regulate competition.
Media contact: Chief Investigator Commerce Act Geoff Thorn
