Andrew Bayly: Commerce and Consumer Affairs Minister on the Government's planned crackdown on mergers

The Government is looking to crack down on merger rules.

The Ministry of Business, Innovation and Employment is reviewing the Commerce Act - which could lead to blocking more proposed mergers and acquisitions. 

It's also hoping to give the Commerce Commission more teeth.

Commerce and Consumer Affairs Minister Andrew Bayley says they're making sure the laws are fit for purpose.

"We've got a number of industries where we've got a small number of players who've got very significant market shares - and it means less innovation happening and more New Zealanders paying more than they ought to."

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Episode Transcript

Speaker 1 (00:00):
So the government is looking to crack down on business mergers.
Commerce and Consumer Affairs Minister Andrew Bailey has announced a
review of New Zealand's laws on competition. He wants to
try and prevent monopolies forming winners losers and the winners
eat the losers and then before you know it, they
become a monopoly. He reckons doing that will improve productivity.

(00:20):
So Andrew Bailey joins you right now, good evening to
your minister.

Speaker 2 (00:23):
Good evening, Andrew.

Speaker 1 (00:24):
So why are you doing this, Well, we haven't.

Speaker 2 (00:28):
Done it for twenty years. There hasn't not been a
formal review for twenty years, and we need to make
sure that we keep pace for our international partners. Australias
and the process of updating their competition laws and many
other jurisdictions around the world have done the similar thing.
But ultimately what we're looking at the New Zealanders we
want to make sure that our laws are fit for

(00:50):
purpose when it comes to assessing mergers and acquisitions. And
I think it's fair to say that we've got a
number of industries where we've got a small number of
players who've got very significant market shairs and it means
less innovation happening, and news enters paying more than they
ought to.

Speaker 1 (01:07):
So you don't mind small companies merging. Is when bigger
the companies merging and you get closer and closer to
a monopoly.

Speaker 2 (01:12):
Yeah. No, this is a tension point. We want to
encourage competition and obviously economies of scale. When companies buy
the companies and grow, that's fine, but there comes a
point when those entities become very substantial. And we have
had instances in the past where we've allowed mergers to

(01:32):
occur that have result in poor outcomes. And have I
given a specific example. I think historically people would look
back on the merger of Progressive when they brought food Stuffs,
which ended up with only two supermarket operators a news
center of large scales, that that was probably a poor
decision in hindsight, but comments commissioners working under the rules

(01:54):
that they had in place at that time. And what
we are suggesting now is we need to review that
and make sure that we don't allow mergers that in
hindsight we're going to look back and say, God, we
should stop that.

Speaker 1 (02:04):
Yes, no, but you know, we're supposed to let the
free market do that do its thing. That's what we did.
That's what Roger Douglas sports isn't. I can't imagine, in fact,
act being very happy about this.

Speaker 2 (02:13):
Oh no, So it's fine. It's not precluding mergers. But
there comes a point when if a certain industries where
they're dominated by a few smaller players ultimately lead to
outcomes where you can't get access to innovative services or
let's say even banking. Right, I'm pursuing it and trying

(02:36):
to encourage open banking, which means FinTechs come and operate
and offer alternative banking products. That's the type of outcome
we want to make sure that occurs. But we're doing
that because we're in a situation where we've got not
enough competition in the banking sector. What we're trying to
do is head that off for the past by these changes,
by looking at introducing and giving the Comments Commission greater

(02:59):
flexibility to assess mergers when they get to a point
where potentially they could exert overt and overbearing market power
on how that operates.

Speaker 1 (03:12):
And while I've got you here, there's some new research
out from RFI Global that says that some retailers are
charging customers to use their credit card and the retailers
are pocketing it. How's your feed cap idea coming along?

Speaker 2 (03:25):
We're the Commerce Commissioner is doing a lot of work
on a moment and I'm keen to make an announcement,
but yes, we want to make sure that New Zealanders
are not paying more than they ought to when they
go to buy their coffee and getting charged at the church.

Speaker 1 (03:39):
Yes, thank you very much, Andrew Bailey, all the best,
Thank you, Commerce and Consumer Affairs Ministered. For more from
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