The Bell Gully Regulator Report lists recent changes, decisions and developments at the main New Zealand corporate, commercial and competition regulatory bodies and also lists relevant updates from the Australian Competition and Consumer Commission. This edition of the Regulator Report covers the period from 4 July 2008 to 29 July 2008. For further details on any matter in this report, just click on the hyperlinks in each item.

Ministry of Economic Development (MED)

Select Committee report on Commerce Amendment Bill
Commerce Minister Lianne Dalziel and Energy Minister David Parker have welcomed the amendments to the Commerce Amendment Bill recommended unanimously by the Commerce Select Committee. The primary focus of the Bill is to reform the regulatory control provisions in Parts 4 and 4A of the Commerce Act concerning suppliers of core infrastructural services which are not faced with competition or the threat of competition, such as electricity lines businesses, gas pipelines and now airports.

The most significant change recommended by the Select Committee is to provide for appeals to the High Court on final implementation decisions by the Commerce Commission. The Bill as introduced only provided for appeals on the detailed rules (input methodologies) relating to the various forms of control. Clearer guidance has also been given to the High Court on its role in considering appeals on input methodologies and a new section provides that input methodologies cannot be stayed while under appeal.

Other changes to the Bill which improve the transitional arrangements to the new regulatory regime for electricity lines businesses and gas pipelines include:

• removing the retrospective application of the new penalty and compensation provisions to breaches of thresholds after 1 April 2008 and replacing it with the old Part 4A processes and provisions until new default price paths are set from 1 April 2010. It was considered inappropriate for the new penalties and remedies to apply to breaches of the old regulatory regime;

• limiting the power to transfer jurisdiction over lines services supplied by Transpower from the Commerce Commission to the Electricity Commission; and

• setting the date for gas pipeline services to transition to the new price-quality regime at 1 July 2012, or earlier if agreed with the Commission, to allow those gas pipeline services to benefit from input methodologies and merit reviews of such methodologies earlier than the 2016 date specified under the Bill as it was introduced.

The Select Committee endorsed the proposed lighter-handed regulatory regime for consumer-owned electricity lines businesses, which limits regulation to information disclosure and monitoring by the Commission. The Committee also recommended relaxing some of the qualifying criteria for consumer ownership of lines businesses and the requirements relating to income distribution for such businesses to make amalgamations of lines businesses easier.

The Select Committee supports shifting information disclosure for the Auckland, Wellington and Christchurch international airports from the Airport Authorities Act to the Commerce Act.
Click here for the press release
Click here to read the full report

Capital Market Development Taskforce
An industry-led taskforce has been set up and tasked with producing a blueprint and action plan to develop New Zealand's capital markets. The Capital Market Development (CMD) Taskforce will look at the current state of New Zealand's capital markets, the international context, future risks and opportunities, and key changes necessary to deliver the best possible financial system for New Zealand. The taskforce will hold its first meeting on 31 July 2008 and has approximately one year to develop and prepare its blueprint and action plan.
Click here for the press release
For Bell Gully commentary on the CMD Taskforce click here

China Free Trade Agreement Bill passes third and final reading
The New Zealand-China Free Trade Agreement Bill passed its final reading on 24 July 2008. The Bill was passed by 104 votes to 17. The New Zealand-China Free Trade Agreement (FTA) will come into force when Royal assent has been granted by the Governor-General and the relevant regulations promulgated. The passing of the Bill amends the Tariff Act 1988, Customs and Excise Act 1996, Fair Trading Act 1986, Electricity Act 1992 and the Radiocommunications Act 1989.

Other administrative steps which must take place before the FTA can come into force on 1 October 2008 include:

• authorisation in Executive Council of amendments to Electricity Regulations 1997 and Customs and Excise Regulations 1996 (28 July);
• gazetting the amendments (31 July);
• an exchange of diplomatic notes between New Zealand and China advising completion of domestic legal processes (1 August).

Click here for more
Click here to access the government's new website on the FTA
For a summary of the key outcomes of the FTA, click here to read the Bell Gully Guide

Trans-Tasman Insolvency Act in force
The Insolvency (Cross-border) Act 2006, which provides a mechanism to deal with trans-Tasman insolvencies, came into effect in New Zealand on 24 July 2008. The Act implements the Model Law on Cross-Border Insolvency adopted by the United Nations Commission on International Trade Law. The Australian Government has similarly adopted this model in its Cross-Border Insolvency Act 2008, which came into effect on 1 July 2008.
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MED sets out its strategy and priorities
The Ministry has identified nine strategic priorities to support the Government's economic goals. These are:

• improving the level and availability of broadband to support growth;
• simplifying transactions between government and business;
• providing aligned and well-focused government support for enterprise and innovation;
• improving the investment environment for New Zealand firms;
• advancing renewable electricity and energy efficiency;
• supporting the development of globally-focused and linked businesses;
• helping New Zealand firms to use environmental integrity for economic advantage; and
• contributing to a single action-focused "One Plan" for Auckland.

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Government moves to make KiwiSaver fairer
The government has announced that it intends to amend the Employment Relations Act to ensure employers meet their obligations to pay contributions to their employees' KiwiSaver accounts. The proposed change will address the situation that has seen some employees paying their employer's contribution to their KiwiSaver account out of their own salary. The Minister of Labour, Trevor Mallard, has stated that the government will change the Employment Relations Act to make it unlawful to offer lesser terms and conditions to a KiwiSaver employee on the basis of their KiwiSaver membership. Such action would give rise to a personal grievance. The law change would come into force on the date the amendments are introduced to the House, but would not affect employment agreements already entered into before that date.
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Appointment to the Accounting Standards Review Board
Commerce Minister Lianne Dalziel has announced the appointment of Bell Gully partner Ralph Simpson as a new member of the Accounting Standards Review Board (ASRB) for a five-year term.
Click here for the press release

Securities Commission

Regulatory Reforms - Fixing Last Year's Problems and Avoiding New Ones
Securities Commission chair Jane Diplock presented at the Securities Regulation and Financial Innovation Meeting of the IPD Task Force on Financial Markets Regulation, held at the beginning of July in Manchester. In her speech Regulatory Reforms -Fixing Last Year's Problems and Avoiding New Ones, she notes how recent events have highlighted that financial markets are now truly global and how there will need to be new approaches to address the changing aspects of the global financial system. She presents her personal view of the ways in which the current global architecture could be revised to address these challenges from the perspective of a securities market regulator.
Click here for a full transcript of the speech

Appointments to the Securities Commission
Keitha Dunstan and Mai Chen have been reappointed as members of the Securities Commission.
Click here for the press release

Takeovers Panel

Takeovers Panel considered non-payment of Abano Expenses
A meeting of the Takeovers Panel was held on 30 June 2008 to consider a complaint made to the Panel by Abano Healthcare Group Limited in relation to the costs claimed by Abano from Crescent Capital Partners Limited in respect of Crescent's unsuccessful takeover offer for Abano in December 2007. The Panel made no determination as to whether Crescent had failed to comply with the Takeovers Code, having been informed that the parties had reached a private settlement on the matter on 27 June. The Panel however noted that the complaint raised a number of important questions of principle in respect of the application of rule 49(2) of the Takeovers Code and that the Panel intends to release a guidance note on the application of rule 49(2) in the near future. The Panel also noted that if it has received a request from a party and has issued a notice to convene a meeting under section 32 of the Takeovers Act on the grounds that a person may not have acted, may not be acting or may not intend to act, in compliance with the Code, the Panel will convene the meeting if appropriate grounds still exist, notwithstanding that the parties may have reached a private settlement in the lead up to the meeting. The Panel will make an order that Abano should pay the Panel's costs for calling the meeting in accordance with the Takeovers (Fees) Regulations 2001.
Click here for the full press release
Click here for a copy of the Panel's decision

Appointments to Takeovers Panel
Colin Giffney has been appointed as the Takeovers Panel Deputy Chair-elect and Peter Scott as a Panel member, cross-appointed from Australia.
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Takeovers Panel seeks expressions of interest for independent expert appointment
The Takeovers Panel has sought expressions of interest from firms that wish to be considered for appointment as an independent expert in relation to a possible takeover offer that may be made for Contact Energy Limited by or on behalf of BG Group Plc.
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Takeovers Code Exemption Notices

The following Takeovers Code exemption notice has been published:

Takeovers Code (South Canterbury Finance Limited) Exemption Notice 2008
This notice exempts the parties to a sale and purchase of the beneficial interest in ordinary shares in New Zealand Wool Services International Limited (NZWSI) from rule 6(1) of the Takeovers Code, subject to certain conditions, so as to return the parties to their respective voting control positions in NZWSI immediately before the acquisition. The minority shareholders in NZWSI will not be disadvantaged by not having the opportunity to vote on an ordinary resolution to approve the acquisition or its reversal because the effect of the conditions of the exemption will be to restore all parties, including the NZWSI minority shareholders, to their respective control positions immediately before the acquisition. The notice applies to acts or omissions occurring on or after 9 February 2007 and expires on 31 August 2008.

The New Zealand Exchange (NZX)

Bell Gully partners appointed to NZX Discipline
Bell Gully partners David Flacks and Mark Freeman have been appointed to NZX Discipline, the body which adjudicates on breaches of NZX listing and participant rules. They are two of seven new members appointed to the special function body, which is independent of NZX and its subsidiaries. David and Mark are highly experienced in corporate and securities law and David has previously served on NZX bodies such as the Market Surveillance Panel and the NZX Legal and Regulatory Advisory Board.

Electricity Commission

Electricity Commission releases Options Paper on electricity market design
The Electricity Commission has released a 200 page Market Design Review Options Paper as a follow-up to its May 2007 Market Design Issues Paper. The Options Paper examines five key areas of concern to stakeholders:

• pricing and competition, especially in the retail market;
• energy affordability issues;
• the effectiveness of the energy-only spot market design;
• demand-side participation; and
• availability of market information.

The Commission is seeking feedback from stakeholders on possible options for addressing concerns identified from the 2007 Issues Paper and proposed future actions presented in its latest consultation paper. Submissions close on 1 September 2008.
Click here for the press release

New Zealand Commerce Commission (NZCC)

Speeches

Operational Separation in New Zealand, Oceania Telecommunications Conference
Dr Ross Patterson, Telecommunications Minister of the NZCC, gave a speech at the Oceania's Telecommunications conference, held over 8-9 July. In his speech, Dr Patterson discussed the changes in 2006 to the Telco Act and in particular the implementation of the separation process of Telecom New Zealand which facilitates access to Telecom's network.
Click here for more

Media releases

The NZCC has issued the following media releases:

Commerce Commission Deputy Chair appointed
Commerce Minister Lianne Dalziel has announced the appointment of Donal Curtin as Deputy Chair of the Commerce Commission for a five-year term. Donal Curtin succeeds David Caygill, who stepped down as Commerce Commission Deputy Chair upon his appointment as Electricity Commission Chair.

Industry regulation and regulatory control

• Commission receives application for EIR Act exemption from Stephen Reindler
  The NZCC has received an application from Stephen Reindler, seeking exemption from section 17 of the Electricity Industry Reform Act 1998 to allow Mr Reindler to take up a position as a director on the board of Meridian Energy Limited.
  Click here for more

Market behaviour

• Commerce Commission files proceedings against Waikato pathology service providers
  The NZCC has filed proceedings in the High Court against pathology service providers New Zealand Diagnostic Group Limited, Hamilton Medical Laboratory Holdings Limited and Pathology Associates Limited. The NZCC alleges that starting in 2003 the companies agreed not to compete to acquire clients from each other in the Waikato area pending a proposed merger of their operations.
  Click here for more

• Commerce Commission reminds industry: comply with statutory information requests or face prosecution
  The NZCC is prosecuting three airlines for not providing information and documents during an investigation into allegations of price-fixing and other anti-competitive conduct in the air cargo industry.
  Click here for more

Telecommunications

• Commission issues draft standard terms determination for the mobile co-location service
  The NZCC has released its draft standard terms determination on the non-price terms for co-location on cellular mobile transmission sites (the Mobile Co-location Service).
  Click here for more

• Commission notifies Telecom of breach of the Separation Undertakings
  Telecommunications Commissioner Dr Ross Patterson has written to Telecom advising that the first prima facie breach of the Separation Undertakings has occurred. It appears that the breach is unintentional.
  Click here for more

Consumer issues

• Commerce Commission to investigate Hanover Finance
  The NZCC has opened an investigation into Hanover Finance. The investigation is into whether Hanover Finance has breached the Fair Trading Act by making misleading representations to prospective investors and/or the public generally.
  Click here for more

• ANZ Investment Services fined for Bonus Bond promotion
  ANZ Investment Services (New Zealand) Limited, a wholly owned subsidiary of ANZ National Bank Limited, has been fined $80,000 plus costs for running a misleading television campaign.
  Click here for more

• Parallel Imported pays the cost for misleading prices
  A store selling parallel imported goods has pleaded guilty to breaching the Fair Trading Act and has been fined $15,000 in the Auckland District Court.
  Click here for more

• Chairs assembled in New Zealand not 'New Zealand made'
  A New Plymouth based office furniture company has been convicted of breaching the Fair Trading Act in an important legal precedent which helps to define what 'New Zealand made' means.
  Click here for more

• Equality Finance admits charging unreasonable credit fees
  In an out-of-court settlement with the NZCC, Auckland based motor vehicle finance company Equality Finance Limited is to refund around 1,400 affected customers a total of approximately $720,000.
  Click here for more

Australian Competition and Consumer Commission (ACCC)

ACCC media releases

The ACCC has issued the following media releases:

Mergers and acquisitions

• ACCC accepts undertaking in National Foods Ltd/Dairy Farmers acquisition
  The ACCC will not intervene in the acquisition of Australian Co-operative Foods Ltd (Dairy Farmers) by National Foods Ltd and Warrnambool Cheese and Butter Factory Company Holdings Ltd, after accepting court-enforceable undertakings from National Foods and its holding company Kirin Holdings (Australia) Pty Ltd.
  Click here for more

• ACCC calls for comment on proposed acquisition of Dairy Farmers by Parmalat and Murray Goulburn
  The ACCC is calling for comment on the proposed acquisition of Australian Co-operative Foods Limited (Dairy Farmers) by Parmalat SpA and Murray Goulburn Co-operative Co. Limited.
  Click here for more

• ACCC calls for comment on Westpac's proposed acquisition of St George Bank
  The ACCC has issued a Statement of Issues on the proposed acquisition of St George Bank Limited by Westpac Banking Corporation.
  Click here for more

• ACCC calls for comment on proposed pharmaceutical acquisition and joint venture
  The ACCC is calling for comment on the proposed acquisition by Metcash Trading Limited of Symbion Pharmacy Services Pty Limited and the proposed joint venture between Metcash Trading Limited and Sigma Pharmaceuticals Limited.
  Click here for more

• ACCC calls for comment on Medibank Private's proposed acquisition of Australian Health Management
  The ACCC has issued a Statement of Issues on the proposed acquisition of AHM by Medibank Private.
  Click here for more

Market behaviour

• ACCC proposes to grant authorisation to central Queensland regional councils
  The ACCC has issued a draft determination proposing to grant authorisation to the Rockhampton, Gladstone, Central Highlands and Isaac Regional Councils to allow them to conduct a joint tender for provision of waste, recyclables and ancillary waste services.
  Click here for more

• ACCC proposes to grant authorisation to AMA NSW
  The ACCC has issued a draft determination proposing to authorise a collective bargaining arrangement put forward by the Australian Medical Association (NSW).
  Click here for more

Telecommunications

• ACCC to oversee access to Telstra exchange facilities
  The ACCC has made a record keeping rule which requires Telstra to keep and retain records and give reports to the ACCC relating to access to Telstra exchange facilities.
  Click here for more

Access

• Telecommunications access dispute
  The ACCC has recently received notification of a telecommunications access dispute under Part XIC of the Trade Practices Act 1974. NEC Australia Pty Ltd notified the ACCC of an access dispute on 8 July relating to Telstra's supply of the Line Sharing Service.
  Click here for more

• ACCC publishes data on take-up of broadband access services
  The ACCC has published details of the take-up of broadband access services on Telstra's copper network.
  Click here for more

Consumer issues

• ACCC receives undertaking from sunglass retailer for non-compliance with mandatory standard
  The ACCC has accepted a court enforceable undertaking from Busby Distribution Pty Ltd, trading as Aldo Australia, after it supplied sunglasses that failed to comply with the prescribed mandatory product safety standard.
  Click here for more

• ACCC alleges misleading and deceptive conduct by indigenous art dealer
  The ACCC has instituted proceedings in the Federal Court, Brisbane, against the operators of Doongal Aboriginal Art and Artefacts.
  Click here for more

• ACCC clarifies data charges
  On 21 July the ACCC issued a news release warning consumers about the potential to incur significant charges where they exceed allocated data downloads on smartphone plans.
  Click here for more

• Diamond seller fined $220,000 for misleading consumers
  On 9 July diamond merchant Carrerabenz Diamond Industries Pty Ltd pleaded guilty in the Federal Court in Brisbane to 27 charges laid against the company by the ACCC for misleading consumers in the promotion of a series of diamond sales.
  Click here for more

• ACCC alleges resale price maintenance by Oobi Baby Pty Ltd
  The ACCC has commenced proceedings in the Federal Court in Melbourne against Oobi Baby Pty Ltd. The ACCC alleges the company engaged in resale price maintenance in relation to the range of infant toy and clothing products that it imports and distributes to retailers throughout Australia.
  Click here for more

• Smartphone mobile data usage – consumers warned to check plans for usage caps/excess charges
  The emergence of new smartphone technology, such as the recent release of the Apple iPhone 3G, has led the ACCC to issue a note of warning to consumers.
  Click here for more

• ACCC alleges false, misleading and deceptive conduct by ATS All Trades and Services
  The ACCC has instituted legal proceedings against ATS All Trades and Services Pty Ltd for alleged false, misleading and deceptive conduct, in contravention of the Trade Practices Act 1974.
  Click here for more

• ACCC institutes proceedings against Australian Co-operative Foods Limited over alleged falsely labelled cheese
  The ACCC has instituted legal proceedings in the Federal Court against Australian Co-operative Foods Limited, which trades as Dairy Farmers, for alleged false, misleading and deceptive conduct in the packaging of certain cheese products in contravention of the Trade Practices Act 1974.
  Click here for more

• ACCC institutes proceedings against Seal-A-Fridge Pty Ltd
  The ACCC has commenced proceedings in the Federal Court in Brisbane against Seal-A-Fridge Pty Ltd and its director, Mr Nigel Rooney.
  Click here for more

• ACCC accepts undertaking from Fairfax Digital Australia and New Zealand Pty Ltd about 'free' services claims
  Fairfax Digital Australia and New Zealand Pty Ltd has acknowledged concerns by the ACCC that advertisements representing the Domain mobile phone property listing search service as 'free' may have been misleading.
  Click here for more