7 Jan 2013

Competition watchdog defends role

12:03 pm on 7 January 2013

The Commerce Commission is rejecting claims it is acting like an activist group for consumer rights.

There are calls for New Zealand's competition watchdog to be overhauled, with some investors arguing that it is undermining confidence in the share market.

The regulator's proposal to force Chorus to cut its charges for access to its copper network shocked the market in December last year and prompted the phone network operator's share price to fall by as much as a fifth, Radio New Zealand's business editor reports.

Shares rose by nearly a quarter in 2012, and another strong year is expected this year.

Former fund manager Simon Botherway says the Commerce Commission has undermined confidence in the market and it has become an activist body for consumers and forgotten about the risk that investors take with their money.

"Those sorts of decisions that they've made - even though it's a draft decision on Chorus - is very negative and they are punitive to investors."

But Telecommunications Commissioner Stephen Gale rejects Mr Botherway's claim the watchdog is acting like a consumer rights group, rather than ensuring investors receive adequate returns.

"We're an independent body and strongly committed to healthy markets. The reason for that is that healthy markets are actually in the best interests of consumers.

"Consumers only really benefit when markets are functioning properly - and that's especially the case in telecommunications where innovation's most of the story."

Dr Gale says the draft decision was one the commission was required to make by law, due to legislation that changed the way prices were calculated, so there was no room for activism.

Mr Botherway wants the Government to overhaul the commission and install an independent board of directors. However, Dr Gale says that is exactly what the panel of independently appointed commissioners is.

Commerce Minister Craig Foss says there are no plans to review the watchdog's structure.