The government – or, more specially, David Clark – has us wondering about the effect(s) of a “prohibition”.
No, not Prohibition (with a capital P), the word applied to the 1920-1933 era when the manufacture, sale, and transportation of alcoholic beverages was illegal in the USA and gangsters flourished.
We refer to “prohibition” as in “ban”, meaning something has been forbidden, outlawed, disallowed or made illegal.
Once something has been prohibited, banned, forbidden, outlawed, disallowed or otherwise made illegal – murder, for example – what more can a government do?
It could toughen the penalties, certainly. But it can’t make murder any more illegal – can it?
Our thinking on this question was triggered by a statement from Commerce Minister David Clark which emerged from the Beehive along with news of
- The arrival this week of the first batch of the 60,000 courses of Paxlovid coming this year to be used from next week.
- The Government’s support for Air New Zealand (as the majority shareholder) by committing to participate in the national carrier’s proposal to raise capital and accelerate the recovery for the airline
- The appointment of Karl Le Quesne as the new Chief Electoral Officer of the Electoral Commission.
- Grants totalling $154,000 for rural communities in the Waikato, Otago and the West Coast “to develop and drive solutions to local challenges”.
David Clark announced that a law to better protect competition has passed its third and final reading.
The Commerce Amendment Bill introduces “a host of reforms to deter anti-competitive conduct”, including strengthening section 36 of the Commerce Act and prohibiting the misuse of market power.
“When large, powerful firms can exercise market power, they can charge more and produce less. This can really hurt small businesses and consumers,” David Clark said.
“Effective competition between businesses promotes better quality goods and services at affordable prices. It also stimulates productivity and innovation.
All this we understand.
Trouble is, Clark said, until now, section 36 in the Commerce Act has been difficult to enforce and insufficient to deter certain anti-competitive conduct.
The Commerce Commission has been unsuccessful in three of its five cases before the courts.
The last of these cases concerned conduct in the early 2000s.
“It is not sustainable to have a law that the competition authority is not able to enforce effectively.”
The reforms will align the prohibition with the equivalent prohibition in Australia and uses a test that already operates in other parts of the Commerce Act.
The amendments to section 36 will also better enable the Commerce Commission and private parties to take action against anti-competitive conduct.
The Bill introduces “other improvements” (whether they qualify as improvements is a matter of opinion, of course).
For the first time ever, Clark said, the Act now broadens the definition of cartel behaviour to include land covenants. The harm restrictive covenants can cause is evident from the Commerce Commission’s market study of the grocery retail sector, which the Government is working to address.
And the Act cracks down on unfair mergers or acquisitions that larger businesses might use to skew the market in their favour. It does this by increasing the monetary penalty the courts can impose to be in the order of $10 million.
Moreover, the Bill reflects Government’s view that intellectual property rights should not be treated any differently under competition law to other forms of property.
So why did the Point of Order pedants become agitated?
Well, the minister’s press statement begins with three bullet points.
- strengthening New Zealand’s anti-monopolisation prohibition (section 36 of the Commerce Act)
- repealing the safe harbour provisions protecting some intellectual property arrangements from competition law scrutiny
- other changes to improve the functioning of the Commerce Act and the Commerce Commission.
Our pedants seized on the first of them – the one about
“… strengthening New Zealand’s anti-monopolisation prohibition (section 36 of the Commerce Act)”.
First, they wonder if a prohibition can be strengthened once it has been imposed.
Second, they wonder about Clark’s objectives.
If he wants to prohibit monopolisation (they argue), why would he want to strengthen an anti-monopolisation prohibition?
They look forward to the minister or his press secretary responding to this article.
Latest from the Beehive
The Government is backing rural communities in the Waikato, Otago and the West Coast to develop and drive solutions to local challenges, Minister for Rural Communities Damien O’Connor announced
New Zealand is boosting its comprehensive suite of medicines to treat COVID-19 with the arrival in the country of one medication, Paxlovid, and the securing of access to the country’s first pre-exposure prophylactic treatment.
A law to better protect competition has passed its third and final reading, Commerce and Consumer Affairs Minister, David Clark announced today.
The Government is continuing to support Air New Zealand as the majority shareholder by committing to participate in the national carrier’s proposal to raise capital and accelerate the recovery for the airline and the New Zealand economy.
I rongo, i kite hoki ngā uri o Ngāti Kahungunu ki Wairarapa me Tāmaki nui-ā-Rua, o Rangitāne o Wairarapa me Rangitāne o Tāmaki nui-ā-Rua hoki, i te hipatanga o te pānuitanga tuatahi o te Pire Puretumu Ngātahi mō Te Rohe o Rongokako (te Pire Puretumu Ngātahi) i Pāremata i tēnei rā.
Justice Minister Kris Faafoi confirmed Parliament’s recommendation to appoint Karl Le Quesne as the new Chief Electoral Officer of the Electoral Commission/Te Kaitiaki Take Kōwhiri.
The Government has launched a new targeted rural service of rapid antigen tests for those who live in remote rural areas.