The Star: December 17, 2020

The Star Thursday December 17 2020
26
OPINION
Latest Canterbury news at starnews.co.nz
Tarras airport plan: Councils square off
Queenstown Lakes Mayor Jim Boult was
recently rebuffed when he attempted to
open up dialogue between his council
and the Christchurch City Council over
the plans for a new airport at Tarras.
The city council is the majority owner
of Christchurch International Airport
Ltd which put up the proposal, and
the Queenstown Lakes District Council
majority owns the Queenstown
Airport Corporation which has its own
expansion plans.
Christchurch Mayor Lianne Dalziel
pointed out to Boult it would not
be appropriate for the two councils
to discuss the airport proposal because
they were associated with competitors
— the two airport companies.
Boult has described CIAL’s Tarras
proposal as a “predatory activity”
THE RECENT public spat
between the Queenstown
Lakes District Council and the
Christchurch City Council over
750ha of Tarras farmland has
tweaked my interest.
Having got themselves embroiled
in commercial activity,
the councils, and the airport
companies in which they are
majority shareholders, must obey
one of the fundamental imperatives
of business life: effective
competition.
The Commerce Act 1986 requires
all businesses to compete.
The Queenstown and
Christchurch airport companies
cannot enter into discussions
about rivalry between them, nor
about how they could best divide
up the airline services market
in Central Otago or the South
lsland.
The Queenstown Lakes District
Council cannot say please
do not enter “our” turf any more
than Auckland University could
have said to Massey University
not to commence tertiary education
at Albany on the North
Shore.
Jim Boult
Lianne
Dalziel
designed to attack the value of Queenstown Airport
and an “unwelcome intrusion into our district.”
Today University of Otago professor of competition
law Rex Ahdar explains why it would be inappropriate
for the two councils to discuss the biggest
infrastructure project to be considered in Central
Otago since the Clyde Dam.
Discussions by rivals regarding
reaching an agreement about the
extent of competition between
them is potential cartel conduct
in clear breach of section 30 of
the Act.
This carries substantial penalties
and will soon (from April
2021) incur criminal liability
(and even up to seven years’ jail)
for individuals deliberately implementing
cartel arrangements.
It is true that section 36
prohibits monopolising conduct
(“taking advantage of substantial
market power”) by powerful
companies, but it is most doubtful
that the potential entry of
Christchurch International
Airport Ltd into Central Otago
is “predatory activity”, as the
Queenstown council charged.
This is competition at work,
and unless CIAL engaged in
predatory pricing (targeted
below-cost pricing to drive out
one’s competitors) itself a very
difficult thing to prove, then the
Queenstown council cannot
complain.
What are the options?
Queenstown Airport Corp
might just call its erstwhile
Canterbury rival’s bluff, sit back
and wait for the Christchurch
company to sink considerable
time and expense going through
the Resource Management Act
hoops, not to mention the swathe
of climate change protesters and
nimby (not in my backyard)
residents of tranquil Tarras.
Alternatively, the airport companies
might decide to overtly
co-operate to launch a new
airport at Tarras.
Here there are two routes.
First, they may enter into a
joint venture.
The Act (in section 31) allows
for “collaborative activities”
where the co-operative enterprise
is reasonably necessary for
the success of the project and
its dominant purpose is not to
lessen competition between the
two parties.
This takes the arrangement
outside the reach of the cartel
prohibition, albeit the project
is still susceptible to challenge
under section 27, the general
prohibition upon contracts, arrangements
or understandings
that substantially lessen competition
in a market.
The other route is more comprehensive
and protracted but
affords full immunity.
The companies could apply for
an authorisation from the Commerce
Commission.
Here, the commission undertakes
a sophisticated cost-benefit
analysis to assess whether the
“public benefits” from the proposed
venture will outweigh the
detriments from the lessening in
competition.
CIAL has optimistically stated
that the project “would provide
significant social and economic
benefits”.
These would need to be
substantiated, and it is always a
hard row to hoe for applicants to
satisfy the commission that an
authorisation is merited.
Yet another option is the political
pathway.
If the Government can be persuaded
that competition in this
important industry would be
wasteful, or that a co-ordinated
approach to New Zealand’s
national airport infrastructure is
better, then it can expressly state
that the Commerce Act ought
not to apply.
It has done this in various sectors
such as shipping, dairy and
electricity.
It has even done this for civil
aviation: the Civil Aviation Act
1990 expressly states that levies
paid to the Civil Aviation Authority
are “specifically authorised”
for the purposes of section
43 (the exemption section) of the
Commerce Act.
The Government could pass
another one-sentence amendment
to the Civil Aviation Act to
cover the sort of market allocation
between airport companies
that is contemplated here.
The quid pro quo to this antitrust
law exemption would be
close scrutiny of the new airport
under the existing regulations
governing “specified airport
companies” set out in part 4,
subpart 11 of the Commerce Act.
Auckland, Wellington and
Christchurch airports are
already subject to this cumbersome
control of “specified
airport services”.
There is no doubt there is more
water to pass under this troubled
aviation bridge.
Meanwhile, the airport
companies must continue to
treat each other as rivals, and
that means no discussions about
curtailing competition, no
collusion nor plans to divide up
the market.
• Prof Ahdar’s latest
book is The Evolution of
Competition Law in New
Zealand (Oxford University
Press, 2020).
– Otago Daily Times
Great gifts for what’s-his-name.
That kid of yours who rarely
steps out of his room.
30%
OFF
SELECTED
LOGITECH.*
If your kid is into gaming, you might not see a whole lot of them — just fleeting
glimpses in the hallway, or at the fridge. But, you still love them, so why not get them
the gift they really want. Showing such understanding might even lure them out
more often. You probably need to remember their name, though.
Offers valid until Tuesday 22nd December 2020, while stocks last, unless otherwise stated. Some products on display in selected stores only – please call 0800 764 847 to check availability. Personal shoppers only. *Discount is off our full retail price and not available in conjunction with any other offer.
SCWK34CS5