Complacency in Competition – the Telecom Breakup Could Not Have Happened Today

I'm at the Commerce Commission’s “Competition Matters” conference. It used to be an annual “must go” event for tragic people like me who take an interest in competition from a variety of perspectives – commercial, legal, economic, consumer, et al. It stopped with the covid lockdown and has only this year been restarted, but with a sellout audience.

Its well organized. The lunch was excellent. But the tone of the debate concerns me.

Out there in ordinary New Zealand millions of people are hurting from massive costs imposed by our electricity, supermarket and banking industries. Most have realized that there is a common cause – market failure arising from weak regulatory settings, with decisive action needed. Think of the successful Telecom breakup in the 2000s.

Yet listening to the sessions I get a sense of resignation. A sense that the best we can hope for is tinkering at the margins rather than the bold, forthright structural change we need.

Why? These are decent, intelligent, committed people – people from the public and private sectors who genuinely want to do a good job. People like yours and my next door neighbours.

I think the problem lies with our underlying political environment. MMP has done no favours for consumers. Theres a sense that our current political and institutional structures are opposed to any change that might be seen as detrimental to the interests of big business – even though it would be highly positive for smaller businesses and consumers.

Theres no way the 2000s structural separation of Telecom would have got through the government’s gatekeepers of today. Instead, Kiwis would still have literally the highest prices in the OECD for our phones and Internet. Today, ACT would have killed separation stone dead.

So parliament is hamstrung by MMP, and the Prime Minister’s almost passionate advocacy for big business at the denial of SMEs. And the public service is hamstrung by the knowledge that there is no political appetite for bold reform, so is just going through the motions.

Thats out of touch with public opinion. The biggest round of applause this morning has been for Kent Duston who gave a passionate consumer-centric summary of the issues. Tex Edwards is scheduled in a similar role this afternoon.

So my message to today’s competition aficionados is this: Become outspoken. If you agree that structural change is needed, say so. Call out bad behaviours. Say what the community needs you to say, not what politicians would like you to say.

Competition is crucial. It is broken. If competition is broken, the capitalist system is broken. And if capitalism is broken, where does that leave democracy?

So to those who work in this complex field please speak out. The community needs the benefit of your wisdom and insights, and we need action now – not in another decade.