Scoop Election 08: edited by Gordon Campbell

Gordon Campbell on the Commerce Commission supermarket inquiry, Kiev and Tunisia

February 21st, 2014

If you were a harried supplier to a New Zealand supermarket, would you trust the Commerce Commission to protect you, your staff and your livelihood if you dared to come forward – to assist an inquiry that looks as if it will be self-hobbled before it begins? Even though the behaviours that triggered this inquiry appear to have been the product of the supermarket duopoly that exists in this country, the Commerce Commission will not be looking at this wider context, but will only be investigating the allegations against Countdown. And it will be offering anonymity only so far as the law permits it to do so.

This seems a very thin layer of protection. In one of its own explanatory papers on how it goes about interpreting the relevant section on market power (section 36 of the Commerce Act) the Commission has spelt out that an “anti-competitive purpose” must be proven to exist before actions become illegal. Armed with a good lawyer, Countdown could get away with anything short of murder via that escape route. Here’s how the Commerce Commission describes the relevant landscape, on its website:

1. A business will break the law if it has a substantial degree of market power, takes advantage of that power and has an anti-competitive purpose.
2. It is not illegal for a business to have a substantial degree of market power. But taking advantage of that market power to harm competition is illegal…
3. High prices in themselves are not illegal.
4. There are many types of behaviour that are illegal under section 36. It is often hard to distinguish anti-competitive behaviour from aggressive, but legal, competitive behaviour.
5. Aggressive rivalry by large businesses may not be illegal – large businesses also have a right to compete. But they are not allowed to take advantage of their market power to prevent others from competing effectively
6. A refusal to deal with or supply someone is not, in itself, illegal…

In other words….you have to prove that in gaining and exercising its market clout, Countdown had the purpose of being anti-competitive. (Honest, I never meant to become so dominant, and mean. It just happened.) Moreover, “a refusal to deal with or supply someone” is OK, unless proven otherwise via this same high test. Under these conditions, the chances of any anonymous allegations against Countdown getting traction would seem to be next to zero. Given its self-imposed narrow scope, this inquiry looks simply like a gambit to take the issue out of the headlines.

The Countdown affair is a reminder that our business world is still living in the 1980s dream world where la la la, markets can be safely left to self-regulate. (In the 1980s, New Zealand’s ignorance of antitrust issues enabled a state monopoly such as Telecom to be sold off, and gifted with virtually unchecked private monopoly powers.) As New Zealand First leader Winston Peters told RNZ this morning, we still don’t have the same [anti-trust] protections enjoyed by other developed countries. We don’t accept (as the United States has for over a hundred years) that markets require regular interventions by regulatory authorities in order to remain free. (Otherwise, their natural state is to converge into anti-competitive forms and practices.) In practice, it seems easier to get a camel through the eye of a needle than to get the New Zealand authorities to recognise and take meaningful action against anti-competitive behaviours. And with Tony Abbott now hard at work gutting the Australian watchdog that has sometimes in the past prodded our Commerce Commission into action (e.g. against cartels) the situation is likely to get worse.

This week’s scenes of slaughter in Kiev have been terrible, and the New Republic magazine tells us why Vladimir Putin welcomes the current crackdown (tyranny = stability, and democracy = anarchy are popular equations with Putin’s Kremlin.) Given the readiness of the Ukranian government to authorise his forces to use snipers to kill protesters and with Putin urging him to stamp out the protests, the Yanukovych regime is becoming like one of those other Russian client dictatorships, such as Belarus.

Add in the three year anniversary of the ongoing protests against the US/Saudi backed repression in Bahrain, and the “Which side is worse?” horrors in Syria…and it may seem facile to highlight a Good News story. But recent events in Tunisia – which was the birthplace of the Arab Spring – have been remarkable. As this article argues, Tunisia has got almost everything right that went wrong in Egypt.

The parallels were striking. For decades, Tunisia suffered under a military-backed dictatorship, then overthrew it with a grassroots struggle, then elected a coalition government dominated by Ennahda, a moderate Islamic party. Almost immediately, Ennahda came under fire from secular forces on one hand, and from Salafist extremists on the other. This pressure included the assassinations last year of two very prominent secular leaders – almost certainly by Salafists, in order to de-stabilise the government. So far, so very Morsi.

Yet that’s when the story diverges from what Mohammed Morsi did in Egypt. Even though it had won its leadership position in elections widely conceded to be free and fair, the Ennahda Party offered in December to step down, and to hand over power to a group of technocrats who would run the country until a fresh round of elections could be called in October this year. This was on condition that none of the technocrats would stand for office again. Among the tasks of the caretaker government would be to begin the task of healing the nation, to ratify a new Constitution and to create a truly independent Electoral Commission. (The new Constitution boldly enshrines gender equality, but the current regulations on inheritance continue to place women at a distinct disadvantage. Clearly, the gender struggle is still a work in progress.) Even so, events in Tunisia do look encouraging, especially when compared to the rolling disaster that Egypt has become. This article in Foreign Policy also notes the contrast.

The significance of the Tunisian model has only this week begun to sink in with US Secretary of State John Kerry, who praised the country for how it has responded to the challenges it faced last year. There is a distant New Zealand link to this story. Much of the credit for how Ennahda has responded to the 2013 crisis has to be given to the party’s mentor, the 72 year old writer/activist Rached al-Ghannouchi. In his formative years, Ghannouchi was heavily influenced by the Algerian thinker Malek Bennabi (1905-1973) one of the Muslim world’s leading thinkers about how a modern Islamic state can be compatible with democracy. Earlier this month, the Duke University political scientist Bruce Lawrence wrote this piece about Bennabi noting that while Ghannouchi was in prison during the early 1980s, he translated Bennabi’s booklet Islam and Democracy, which inspired Ghannouchi to begin his own most important work Public Liberties in the Islamic State.

So where is the tenuous New Zealand link? Well, one of Bennabi’s other students was the former Algerian refugee Ahmed Zaoui, now a New Zealand citizen. Bennabi’s ecumenical ideas and commitment to peaceful conciliation between Islam and democracy were repeatedly cited by Zaoui throughout the four and a half years that our clueless security services were claiming him to be a terrorist threat. Yesterday, the incompetence of the New Zealand security services was once again in the spotlight.

The head of the GCSB spy agency, Ian Fletcher, has apologised to Prime Minister John Key for making embarrassing errors in its 2013 annual report on the number of interception warrants and access authorisations in force and issued. In each case it under-stated the number.

Gosh, the GCSB has under-reported how many people it has had under surveillance. How surprising. Whatever misgivings we might have about the Commerce Commission looking into the allegations about Countdown, we do need to look on the bright side. At least the security services won’t be handling the investigation.

ENDS

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    1. 2 Responses to “Gordon Campbell on the Commerce Commission supermarket inquiry, Kiev and Tunisia”

    2. By John Monro on Feb 21, 2014 | Reply

      According to some articles I’ve been reading, Ukraine is ruled by an oligarchy of stupendous wealth, working through political patronage, which penetrates every aspect of political life there. It is a rotten state. New Zealand (and many other countries) has something rather similar, not so obvious, not so extreme, but nevertheless very damaging to our democracy. This is why the Commerce Commission will never be anything but a toothless tiger, it’s run by business for business and for the politicians that big business controls. Even where big business itself might be suffering the immediate effects of anticompetitive behaviour or cozy cartel arrangements, the club of this elite will not rock or sink the very comfortable boat that this elite are travelling in. Rather pay a bit more than one needs for electricity, for instance, than suffer a robust examination of one’s own anticompetitive behaviour, whether banks, insurance, building supplies, construction, supermarkets or TV and broadcasting . We saw this in the recent report on electricity pricing by the Electricity Authority, a wholly absurd document produced by members of this clique, whose primary purpose was to squash dissent and support the comfortable, and profitable, status quo.

      There is something really nasty and immediately dangerous happening in the Ukraine; our version is more subtle and more parochial, but it is, in the long run, just as corrupting.

    3. By R Bee on Feb 25, 2014 | Reply

      I am disgusted that these two Supermarket companies controlling the New Zealand public by creating through advertising, a feeling that they compete, when in fact they are simply creating a feeling in the public eye that competition exists, when in fact this is an extremely controlled duopoly which they will fight to the death to maintain in this country.

      An example of this control is when The Warehouse moved to sell food and effectively compete as a third player in the New Zealand food market, very quickly both Foodstuffs and Progressive moved in each taking a stake in The Warehouse and by exerting their influence, they closed down this potential threat to their duopoly.

      I personally believe that if our Government moved to ensure a truly competitive food market in this country, that the New Zealand public’s food bill would reduce by around 40%.

      Imagine the effective growth in the New Zealand economy, should the huge multi million dollar profits currently enjoyed by almost every supermarket owner in the country, is shifted and spread across every New Zealand family.

      It’s about time for New Zealanders to stand up to this malicious big business control of our lives via our most basic human need, food!

      I for one are very angry about this and ask others to realise the truth, tell their MPs that they want a third, dependant player in the market!

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