The evaluation of public benefit and detriment under the commerce act 1986

Abstract

Under the Commerce Act 1986, whose stated objective is “to promote competition in markets within New Zealand”, an anticompetitive merger or restrictive trade practice may be authorised by the Commerce Commission on public benefit grounds. The purpose of this paper is twofold. Firstly, certain broad categories of frequently claimed benefits and detriments, and their evaluations by the Commission and Courts are assessed in the context of the Williamson merger tradeoff model. Secondly, the approach adopted by the Commission and Courts in balancing benefits and detriments is considered. About 1990 the “income weighting” approach favoured by the Commission was, under the influence of early decisions by the Courts and other factors, supplanted by an “efficiency” approach This new approach was endorsed in the recent review of the Commerce Act. Amendments to the Act to entrench that approach are expected.

Notes

Department of Economics, Massey University, Palmerston North.