Paul G Scott

Competition law has been blamed for the failure to successfully regulate network industries in New Zealand. Most of this blame has been apportioned to New Zealand’s monopolisation provision found in section 36 of the Commerce Act 1986. This paper argues that, in reality, the Commerce Act 1986 was in tip-top shape at the time of drafting, and more than up to the job of regulating network industries. The regulation of the telecommunications and electricity sectors failed as average wholesale prices in both the telecommunications and electricity sectors were much higher than they would have been had effective competition prevailed. The resulting industry specific regulation to combat these issues was not, the author suggests, a result of the failure of competition law, but rather a perceived failure of competition law, specifically of section 36. The legislative history and early application of section 36 showed that it was an effective tool to regulate network industries. The perceived effectiveness of section 36 changed as a result of the Privy Council decision in Telecom Corporation of New Zealand v Clear Communications Ltd, which was seem as too lenient on monopolists. New Zealand courts subsequently failed to engage in analysing and adopting section 36. In particular, the courts relied on too literal an interpretation of section 36’s statutory language, instead of fashioning a test to find monopolisation. They also failed to rely on overseas jurisprudence and scholarship to help determine competition law liability. The recent New Zealand Court of Appeal decision in Data Tails is a step in the right direction. It shows willingness on the part of the court to be receptive to overseas jurisprudence and case law, and a departure from a more literal interpretation of section 36.