Labour plans sterner anti-trust law

Press, 28 March 1981, Page 11

Labour plans sterner anti-trust law

PA • Wellington _ Sterner anti-trust legislation to assist in a more rigid policy against business takeovers and mergers has been promised by the Leader of the Opposition (Mr Rowling) should Labour become the Government after the General Election in November. He told the Tauranga Chamber of Commerce that the point had come where strong action was essential to keep a successful balance between rights, freedoms, and controls.

"Non Labour government that I lead has any wish to stick its nose into the-nonnal daily life of the market place. "But we are determined that fair competition will' prevail, that powerful interests will not be allowed to demolish the small business sector, and that. economic power and opportunity will be spread throughout the economy.” The spread of power and opportunity would be achieved by protecting and encouraging the unit where

New Zealand was at its best — the small and mediumsized industry. He said the basic Commerce Act, 1975, was a Labour Government act developed in the early 1970 s to try to meet what was seen as a need to galvanise the commercial sector into being more competitive. _ “But its operation in practice, and the big changes in the whole economic climate, have shown it to be hardiy worth the paper it is printed on. ‘The direction of subse-

quent governments has emasculated it to a point of, impotence. Legal experts have exploited every loophole in the system. The public and the business community have neither respect nor confidence in the protection it can offer. “There has not been a monopoly inquiry in five years.. The only merger the legislation really stymied in recent years was the Fletcher-Carter-Holt proposal.” Mr Rowling said. , "Fletcher - Challenge - Tasman, which was liable for

examination under several clauses of the act, went through without the Examiner (of Commercial Practices) even visibly twitching.” The new phenomena of the multi-industry conglomerates were not catered for in the law. "That situation cannot continue. The law must be drastically revised,” Mr Rowling said.

"The broad outline of new Labour legislation was clear in our minds.” Labour intended to.restore to the law the Government’s right to order an inquiry into monopoly or conglomerate activity, either on government initiative, or at the request of consumers and/or, business employee interests. Such authority must rest with the government and not with a departmental officer. "The penalties, the liabilities under the act, must be equally clear. Few people realise the potential power of the existing act,” Mr Rowling said. It could, fbr example, require a guilty company to get rid of its business, in’part or in whole; get rid of some corporate associations; or subject the goods involved to price control, or a reduction in import protection. Those penalties could and would be enforced.

“In addition, it is our view that the financial penalties now involved are chicken feed, at present no deterrent. If they were increased to bring the maximum up to about $250,000 for a major infraction of the rules, I suggest even the largest of the super-companies might be forced to view the law with more respect,” Mr Rowling said. The law governing mergers and take-overs would also face review.

Two main changes were essential. The asset level above which mergers were checked was “quite unrealistic.” Many potentially .undesirable mergers fell outside the net.

“We have not yet finally determined what combination of assets, turnover, and other factors will be used as the new ‘trigger’ that will take a merger through for further examination. But it will certainly be a lot more searching, and a lot more commercially sophisticated than the process applied now,” he said.

The examination of those mergers would be taken outside the departmental arena and passed over to a new independent, and properly serviced' authority, or commission.

“The office of the Examiner of Commercial Practices has, in our view, been discredited by recent events and by the general emasculation of the law. “The lack of services, the inevitable Government and political pressure that rebound onto civil servants, and the inbuilt tendency to delays and bureaucracy that haunts any major Government department, all make it difficult to reconstruct the old system,” he said.