Monday, March 13, 2006

Karyn Scherer: Bloodhound for a watchdog

Paula Rebstock can legitimately claim to be one of the most powerful women in New Zealand.

The Commerce Commission chairwoman has certainly made her mark since taking over as head of our competition watchdog less than three years ago.

Her first major case was rejecting the merger of Qantas and Air New Zealand - a brave move for someone who is supposed to be independent, but who is nevertheless appointed by the Government.

And in that first major decision, she set the pattern for what was to follow. Like a good journalist, she has upset just about everyone, yet ultimately managed to win plaudits for being tough but fair.

Business Roundtable executive director Roger Kerr is right to point out that New Zealand is beginning to buckle under the weight of ever more regulation.

But those who fret the CC has become too much like the ACCC underline the weakness of their own case.

The watchdog was never a poodle, and has not exactly transformed into a rottweiler overnight. But it does seem to have acquired some bloodhound genes - sniffing out what it perceives as odd smells in all sorts of curious places.

Under Rebstock's reign, the commission has questioned vertical integration and the benefits of implied competition (the Stevenson/Fletcher Building decision), rates of return on network monopolies - among other things - in the energy sector; the relationship between newspaper and online classified advertising markets (Fairfax's bid for Trade Me); and examined the necessity of maintaining viable competitors when competition for business occurs only once or twice a year.

It has gone after small business, too. Cardboard box makers, funeral directors, car dealers and eye surgeons are among those who have felt its wet nose press rather too close to their more private parts.

Rebstock insists she isn't being any more aggressive than her predecessor. She has more regulation to oversee - and more resources to match. The commission is, she says, simply going after cases that give "more bang for the taxpayer's buck".

Regardless of whether that is actually true, we should remind ourselves that the Australians put up with much worse under what probably seemed like the very long reign of Professor Allan Fels. And as Fels quite rightly points out, what New Zealand is now experiencing is the norm in many other countries.

The old rule of commerce - buyer beware - has been turned on its head. The new mantra is: business beware. You are being watched.

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