Thursday 24 October 2019

A version of antitrust I could support

I can see plenty of reasons why antitrust law is not applied to policies and regulations that restrict competition or create cartels, but it's hard to see good reasons why antitrust law is not applied to policies and regulations that restrict competition or create cartels.

I argue for parallel treatment (ungated).

There are plenty of areas that would be eminently worthy of ComCom investigation, presumably through its new(ish) market studies remit. Basically, that lets ComCom run a study of a market to see whether there's restraint of competition or cartel stuff going on.

Here are a few areas where regulation and policy stifles competition and/or creates cartels:

  • Building materials supply regulation in conjunction with council risk-aversion on building consenting caused by councils facing joint-and-several liability. Makes it very hard to import building materials approved for use in trustworthy, comparable places like Seattle, Vancouver and Tokyo. 
  • Land use regulation at council level that encourages land banking and stymies competitive land supply, and the incentives set by central government that make those regulations optimal from the perspective of local government. There is absolutely no good reason for Auckland Council's processes around road naming. The cost and delay imposed by the rule that adds months of capital holding costs seems deliberate. Why isn't the person who came up with that under Commerce Commission investigation? 
  • Rules mandating that pharmacies be owned by pharmacists
  • Separate New Zealand certification regimes for all kinds of stuff when we should just be recognising that things good enough for other comparable places are good enough for here too. I heard one story the other day about how ovens need to go through separate NZ certification; just being certified for use in Australia somehow isn't good enough. There's gunk like this all over the place.  
  • Some of our phytosanitary rules. Go on and convince me that rules around importing hop plants here are set for any reason other than protecting the Hop board. Is it true that they own the IP on the only varieties allowed in? 
  • The government protects the medical cartel from foreign competition by making it very hard for doctors in good standing in places like Canada to come and hang up a shingle here as GP. If you want to do it, you'll have to spend months under supervised practice in a hospital here first. Even if you've had a successful practice in Canada for ages. How many of our problems in getting rural GPs would be done away with if Canadians sick of miserable winters moved into semi-retirement as part-time GPs here? 
That's a short starter. 

I am not optimistic that it will ever happen. The government and its subsidiary arms are the biggest cartel around, and will not brook the application of its own investigation apparatus to itself. Kinda like that thing where the police get to ignore any findings of the Independent Police Conduct Authority. The State does not like to constrain itself. 

But just imagine how much regulatory quality would improve if an independent commissioner over at the Commerce Commission could launch investigations into the anticompetitive effects of regulations at the different Ministries (hi MBIE), with the ability to issue orders nullifying regulations where the anticompetitive effects dominated any likely benefits of the regulations. 

It's also fun to think about the potential application of the criminal cartel rules for officials who knowingly put in place regulatory regimes that act in restraint of competition without adequate safeguards that the benefits of those rules dominate the anticompetitive effects. 

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