Marketing boards and anti-trust policy

Abstract

This Discussion Paper presents some views on the relationship between the Acts under which the producer boards operate and the Commerce Act, 1986. In particular, the discussion reviews the interpretation of the powers contained in the Apple and Pear Marketing Act, 1948 in conjunction with the Commerce Act, 1986. While the Apple and Pear Marketing Act provides for monopoly power to be held by the New Zealand Apple and Pear Marketing Board, the Commerce Act provides for the promotion of “competition in markets in New Zealand” (Cooke, 1989). This apparent conflict has been addressed in a recent court action involving the New Zealand Apple and Pear Marketing Board and Apple Fields Ltd. This Discussion Paper presents an economic perspective of the case and its outcome and raises a number of questions which should be addressed. In particular, the ruling provides for the Apple and Pear Marketing Act to take priority over the more recent Commerce Act. Was this Parliament's intention? This case also raised the question of the appropriate representation for people and organisations involved in particular industries. While the democratic system entitles each participant to one vote, should there be some form of weighting where the participants are far from equal in their involvement in the industry, for example, should the 10 hectare apple producer have the same voting power as a 10,000 hectare producer? A further question of importance is the relationship between existing industry participants and new entrants. While freedom of entry and exit is a basic economic principle necessary for maximisation of returns, there appear to be grounds for justifying some constraints on new entrants. However, such constraints would be unnecessary were a free market to operate in terms of grower rights associated with access to export channels. Such issues are raised in this Discussion Paper. Further examination and review of these points is clearly necessary.