Transcript Slide 1

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2012 Taiwan International Conference on Competition Policy and Law
20 Years of the Fair Trade Act – Retrospect and Prospect
Taipei, Republic of China, 26/27 June 2012
Agency Effectiveness – the New
Zealand Experience
Dr Mark Berry, Chair
Commerce Commission
Outline
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Why ask questions about agency effectiveness?
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How do we rank?
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What general principles ought to apply in assessing effectiveness? The
four pillars:
o
objectives/goals
o
selection and flexible application of correct “tools”
o
ex post assessments of performance
o
capability and capability enhancement
(This is a condensed version of the eight Kovacic measures: see (2009) 16 Geo Mason L
Rev 903,923)
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How Well Do We Do?
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All organisations need to set goals and measure performance
against those goals.
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The assessment of antitrust agency performance is complex.
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Regrettably, there is no easy meaningful and consistent way
to measure performance.
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How Well Do We Do? (continued)
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This does not mean that we should not assess performance
(we must).
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It simply means the assessment is more complex:
o quantification assessments are limited in scope and may
be unreliable (and create wrong incentives), and
o some of the more important assessment measures are
essentially subjective and involve long-term perspectives.
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How Have We Been Recently Ranked?
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GCR – 3½ stars, but “falling”.
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Not apparent who makes this assessment, or what criteria is used.
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The “falling” appears based on two concerns raised by GCR:
(1) Monopolisation cases have “all but dried up” in light of the recent
0867 Supreme Court decision.
(2) “Fresh cartel cases were thin on the ground in 2011. No dawn raids
were carried out and practitioners report very little activity beyond
the tail-end of cases that were begun in years gone by.
…Practitioners hope this will change.”
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How Have We Been Recently Ranked?
(continued)
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Is our effectiveness to be measured against such policy constraints (for
which we are not responsible) and a need to create supply in antitrust
enforcement to match law firms’ revenue targets?
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In another recent survey, we were ranked 1st in merger enforcement:
o see Center for European Law and Economics: The Global Merger
Control Index 2012.
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How Have We Been Recently Ranked?
(continued)
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Further, we face particular challenges as a small antitrust agency in a small
market economy: this may also impact on comparative agency assessment.
o
our markets are small and highly concentrated
o
there is no culture of whistle blowing
o
we have adjudication challenges where a tension exists between productive
efficiency and competition
o
there is a fine balance between allowing fewer more productively efficient
firms, and the creation/realisation of market power, and
o
misplaced intervention can chill market developments.
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What Matters? Step 1, The Culture
Shift
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In the past we have measured performance against activity counts
(eg numbers of cases and press releases, penalties achieved etc).
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These measures matter, but only a little bit (ie they may reveal an
agency “asleep at the wheel”).
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The shift from this “safe” way to measure performance has
involved a culture change – and certain risks.
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The shift from the “old” to the “new” culture is ongoing.
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The search for what matters requires constant reassessment.
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What Matters? Step 2, The “New”
Culture
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Our current approach to setting our performance goals followed strategic planning
in 2009/2010 (and included stakeholder engagement).
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Our approach to assessing our effectiveness is based upon four central pillars:
(1) The setting and achievement of objectives/goals.
(2) The selection and flexible application of correct “tools” (ie advocacy,
settlement or enforcement – and the policy agenda issue).
(3) Ex post assessment of performance, measured against the stated
objectives/goals.
(4) Capability and capability enhancement.
Objectives/Goals: Why?
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Objectives/goals need to be identified ex ante for a number of reasons:
o
they provide a basis upon which to measure progress and outcomes
o
they assist in allocation and prioritisation of scarce agency resources
o
they become a point of reference for the development of work programmes
o
they facilitate communication and accountability (and assist stakeholder
dialogue), and
o
they motivate and provide guidance to staff.
(See Kovacic et al (2011) European Competition Journal 25,31)
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What Are Our Objectives/Goals?
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“To achieve the best possible outcomes in competitive and regulated
markets for the long-term benefit of New Zealanders.”
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Current governmental policy aims to build a more competitive and
productive economy (will any given policy make the economy grow?)
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The outcomes that we seek, in order to achieve this goal, are as
follows:
o markets are more competitive, and
o consumers are better informed (leading to more competitive
markets).
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What Approach to Achieving the
Objectives/Goals?
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In order to assess if we are realising our objectives/goals, it is necessary to assess
the impacts we may have.
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Impacts depend in large part on the selection of the range of “tools” that are
available.
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We think there are three main measureable impacts:
(1) improved levels of awareness and understanding of competition and
consumer law
(2) improved levels of business compliance with competition and consumer
laws over time, and
(3) detection and appropriate actions in response to
non-compliant conduct.
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Strategic Framework
We achieve the best possible outcomes in competitive and regulated
markets for the long-term benefit of New Zealanders
Markets are more competitive
Consumers are better informed
Businesses undertake fewer anticompetitive mergers and trade practices,
allowing markets to function more
competitively
Businesses represent goods and services
more accurately, allowing consumers to
make better informed purchasing
decisions
Businesses and
consumers are aware of
and understand
competition and
consumer laws and the
benefits of competition
Improved levels of
business compliance with
competition and
consumer law over time
Business conduct that
does not comply with
competition or consumer
laws is detected and
responded to
appropriately
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How Do We Measure These Three
Impacts?
(1)
Awareness and understanding:
o we conduct general surveys of awareness
o
the first survey in 2009/2010 reflected a high level of recognition, confidence
and trust in us – but low levels of understanding of our competition laws
o the challenge for us is one of communication/advocacy
o sector specific targets for awareness/advocacy have also been identified (eg
construction sector, given international cartel experience in this sector) and
o our success depends on future surveys showing greater awareness and
understanding.
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How Do We Measure These Three
Impacts? (continued)
(2)
Improved levels of business compliance:
o should be enhanced if we succeed with communication and advocacy, and
o not easily measureable.
(3)
Detection and actions:
o each case is assessed on its facts – no annual targets, and
o actions can be based on:
⁻
compensation or refunds for affected consumers
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penalties as a deterrent
⁻
test cases (to create new law).
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An Aside – The Policy Issue
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The Commerce Commission is an independent Crown entity.
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It is a quasi-judicial body.
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Another agency, the Ministry of Economic Development, reports
to the Minister of Commerce and is responsible for policy advice.
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As a general rule, we work closely with the Ministry of Economic
Development on policy initiatives, and make operational
submissions.
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An Aside – The Policy Issue (continued)
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But there are times where the achievement of our objectives/goals
requires more than this.
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In these cases, we endeavour to lead policy change (ie
monopolisation and interview powers).
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Success in such policy initiatives is consistent with the
achievement of our objectives/goals.
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Ex Post Assessment of Performance
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Some have already been noted in the impacts discussion above.
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In broad terms we are endeavouring to measure our performance
against the following criteria:
o survey awareness of competition and consumer laws
o percentage of businesses that have an active compliance
programme
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Ex Post Assessment of Performance
(continued)
o
levels of market competition not substantially lessened where
we have granted clearance/authorisation or declined to take action
(including OFT framework for ex post merger and market conduct
reviews), and
o
penalties, compensation, refunds as an indication of appropriate
outcomes (but no targets set because of perverse incentives).
(For further discussion, see pages 13-14 of our Statement of Intent 2012-2015,
www.comcom.govt.nz/accountability/).
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Capability and Capability
Enhancement
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In terms of organisational effectiveness, the capability of staff is a “top of the
list” consideration.
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The Commerce Commission is now 26 years old.
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Organisational capability has grown over time.
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A recent organisational restructure has been part of this process, recognising
the need for enhanced capability of staff.
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The talent pool in New Zealand is small: accordingly international outreach
for staff, co-ordination with other agencies, and participation in international
fora and academic research centres is all the more important for us.
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Capability and Capability
Enhancement (continued)
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This is a long-term game: investments made today (eg our
proposed summer clerk programme) may not have a pay-back
for some time yet .
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Anecdotally, capability is measureable (eg feed-back from
stakeholders as to quality of work), and there is also the
prospect of judicial scrutiny in some cases (eg Phase 1 of Air
Cargo).
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Some Final Comments
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It has been an honour to have been invited to talk today on this important
subject.
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We by no means consider ourselves to be the experts on this subject.
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We are on a learning curve.
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Our current approach to assessing our performance essentially started only in
2009/2010.
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In (say) five years we hope that with the benefit of further experience and data,
we will be able to draw firmer conclusions on the extent of our achievements.
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