Page 8 - HW 0822

hard news
Feedback due 1 September on ComCom’s Market Study
THE DRAFT REPORT for the Commerce Commission’s Market Study into Residential Building Supplies has been published and feedback requested.
From the Draft Report’s Executive Summary, ComCom’s “preliminary view is that competition for the supply and acquisition of key building supplies is not working as well as it could if it was easier for building products to be introduced and for competing suppliers to expand their businesses.”
ComCom cites two main factors “negatively impacting” competition
for key building supplies that “make it difficult for competing products to be introduced in New Zealand markets and for competing suppliers to expand their businesses.”
This encourages status quo, says ComCom,and“reinforcesthemarket position of established building products and methods, and of existing suppliers of those products in highly concentrated markets.”
The two key factors are:
1. “The regulatory system continues to
incentivise designers, builders, and Building Consent Authorities (BCAs) to favour ‘tried and tested’ building products over new or competing products.”
2. “Quantity-forcing rebates paid by established suppliers to merchants appear, under certain conditions, to be reinforcing barriers to distributing new or competing products in some product markets.”
Draft recommendations include:
• Introducing competition “as an objective to be promoted in the
building regulatory system,” creating more compliance pathways for a broader range of key building supplies and providing incentives for designers and market participants to use and adopt new or competing building supplies.”
• Identifying and developing methods to centralise information sharing about key building supplies (a “BCA Centre of Excellence”), a pathway for which may be provided by the current MBIE-led review of the building consent system.
• Addressingrecommendationsrelating to quantity-forcing supplier-to- merchant rebates and use of restrictive land covenants and exclusive lease arrangements.
Word around the hardware channel is that the Draft Report contains nothing unexpected, and, as with the supermarket sector report, ComCom will actively address anti-competitive land covenants and goes so far as to state it will take an as yet unnamed DIY retailer or merchant to court in this respect.
Industry responses so far have been quite reserved, both from the supply side and from DIY retailers and merchants.
“Initial impressions ... are favourable,” says Julien Leys on behalf of the New Zealand Building Industry Federation (BIF), the main caveat being: “The recommendation to remove impediments for product substitution makes sense
as long as this does not allow products that may not perform as part of a specific design for an approved building system (such as a wall with associated fire, moisture, bracing, or acoustic characteristics) etc.”
The Registered Master Builders Association welcomed the Draft Report at the same time as calling for faster and more deliberate action.
“This is a reasonable start in identifying factors negatively impacting competition
andrecommendingactionstomitigate these.
“While we agree with the Commerce Commission that the regulatory system can facilitate more products coming into market, these ideas need to be translated into real action, and should be taken further,” says Master Builders CEO David Kelly.
“The BCA Centre of Excellence is one idea that has potential, because we need to bolster our expertise. However, we believe this entity should have broader powers to consolidate our consenting regime.”
“New Zealand needs a centralised mechanism to drive better consenting consistency and responsiveness across Building Consent Authorities. We currently have over 60 consenting authorities operating in ad-hoc manner, and it is clear this is not working.”
Submissions on the draft report are due by 1 September. A consultation conference will be held in Wellington
in the week of 26 September, with post- conference cross-submissions due by 13 October.
ComCom’s final report is due by 6 December 2022, after which it is up to the Government to decide how it will respond.
https://comcom.govt.nz/
6 NZHJ | AUGUST 2022
MORE AT www.hardwarejournal.co.nz