A little knowledge is a dangerous thing

October 31st, 2012 at 9:00 am by David Farrar

Stuff reports:

The has unconditionally approved ’s purchase of TelstraClear, a decision the Green Party says will reduce options and push up prices.

Co-leader noted the terms of the $840m takeover included a clause that would prevent Telstra re-entering the New Zealand market for an undisclosed period.

“Make no mistake – Vodafone’s move is about eliminating competition,” he said.

“We’ve seen it in the banking sector, the insurance sector, and now it’s happening in the telco sector. Vodafone’s takeover of TelstraClear will inevitably lead to higher prices for end-users, businesses, and government.

“It’s not in the long-term interests of the New Zealand economy for our primary competition regulator to be eliminating competition in the telecommunications industry.”

Oh Good God, now Russel wants to be the Commerce Commission also. Let politicians decide on the basis of a five minute chat to their staff, rather than you know months and months of legal and economic analysis.

However, the commission said it did not find any significant business overlap between Vodafone and TelstraClear in the provision of either mobile phone services or fixed line services to large businesses.

Exactly. It would be vastly different if it was a Telecom and Vodafone merger. That would be bad for consumers. But many in the industry think that the TelstraClear acquisition by Vodafone will actually enhance competition as it means there will be a fully fledged competitor to Telecom. Individually neither TC nor Vodafone could effectively compete with Telecom in all aspects. Together, they can.

With David Parker having declared that Ministers (not shareholders) should determine who can buy F&P shares, and Russel Norman declaring who can buy TelstraClear, it is becoming clear that in a future Labour-Green Government the way to get sales approved will be to cosy up to Ministers.

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16 Responses to “A little knowledge is a dangerous thing”

  1. Mark Unsworth (40 comments) says:

    But David ,you can only cosy up to Ministers if you are a registered lobbyist !!!

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  2. thomasbeagle (78 comments) says:

    I’m not sure if making a stronger duopoly will really increase competition. The temptation to not compete too hard and thereby raise profits will just be too tempting.

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  3. bhudson (4,734 comments) says:

    So what exactly was Russel’s plan to increase competition if Voda was not permitted to buy TCL?

    Was he going to legislate to force Telstra Corporation to pour more capital into TCL so that they could expand and develop more services? (Because the level of investment was not forthcoming to transform the competitive landscape in NZ. Voda offers greater impetus and wherewithal to take competition to Telecom. And will now also have a fixed line business to help to do so.)

    In his myopic view of both economics and the real world, Russel probably thinks that is possible!

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  4. Key is our man (786 comments) says:

    Get used to this Kiwis. This is how the 2014 Labour-Green-NZ First-Mana government will work. Communist style restrictions everywhere. I won’t be surprised if tariffs are imposed back and FTAs become extinct. Anything that moves will be taxed to death. Kiwis definitely deserve such a government for a while so that they learn the lessons of their life and stop whinging once for all.

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  5. Grendel (951 comments) says:

    Norman is a fucking idiot.

    “we’ve seen it in the insurance sector” really?

    Currently this is the list of major life insurance companies in NZ:

    AIA
    Asteron
    AXA/AMP
    Fidelity Life
    Tower
    Sovereign
    Onepath
    Partners Life

    thats 8! – so the merging of AXA and AMP has reduced ‘choice’ by 115% amongst the major insurers. this is before you add in the banks, westpac has their own cover (though its rubbish), and Kiwibank is working on their own (and they will also be rubbish), plus the minor companies. there are even 6 major health insurance suppliers (adding Southern cross and Accuro to 4 of the above list).

    So i hope someone questions norman on whats supposedly happened in the insurance sector.

    hell if we go to the fire and general sector you have:

    AA
    IAG State
    IAG NZI
    IAG AMI
    Vero
    Tower

    plus of course the minors again. now we will see some consolidation as IAG work out what to do with the basket case that is AMI, but there is still plenty of competition.

    theres still 5-7+ banks depending on how you count the Co-op, TSB, SBS etc.

    and the biggest irony, norman, a green, a statist who wants the state involved in everything, now cares about competition? give me a break.

    what are the odds that no reporter calls Norman out on any of this?

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  6. alex Masterley (1,490 comments) says:

    Grendel,
    There will be flocks of porcine aviators going past your window before that happens.

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  7. Peter (1,578 comments) says:

    You’d think one churnalist would want to make a name for herself. It would be easy. Simply challenge the Greens.

    No one else is doing it. No competition in that space.

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  8. seanmaitland (455 comments) says:

    There are over 65 ISPs in New Zealand – sure a lot of them use Telecom’s infrastructure, but they still manage to undercut Telecom’s prices for phone and internet. How is this going to impact competition again?

    Telstra is a dog – the worst customer service in NZ by far, being swallowed by Vodafone is good.

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  9. jaba (2,089 comments) says:

    Key is our man .. you are 100% correct, HELP

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  10. Ross12 (1,148 comments) says:

    All Norman wants is his name in the news. It does not matter why , just keep it there. But the idiot doesn’t realise all he is doing is digging a big hole for himself. In some ways for National it is better that the Government limits their response to him because he will just get more reckless with his comments as his ego inflates.
    I hope DPF or some other National insider is keeping a list of these stupid comments so they can all be trotted out prior to the election –it will be a long list by then , the way he is going.

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  11. RRM (9,447 comments) says:

    I facepalmed uncontrollably when I saw this on Stuff last night.

    The trouble with shooting from the hip is – even if you’re very good you’ll probably miss.

    And if you’re not very good, you’ll almost certainly miss. So don’t do it.

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  12. lastmanstanding (1,204 comments) says:

    Tip to those with shares on NZX. If it looks like a Lab/Green/NZ1/Mana government I will be selling all my NZ shares. The NZX will collapse as foreign holders bail out. They will be aware of Kullens interference in AIA/ Canadian Pension Fund and statements by Parker/ Norman and will sell sell sell.
    These noddies will effectively nationalise the NZX with Minister approval being required to buy/sell any share they say is of strategic importance.
    Hell they can say that about any stock on the market if it suits them. And they will. Economic pygmies the lot of them.

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  13. alex Masterley (1,490 comments) says:

    Also buy foreign currencies as the NZD will collapse in a heap.

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  14. Poliwatch (335 comments) says:

    This is what happens when you have people involved in politics who have no worldly experience. Quite frankly if I was going to pay $840 million to someone to buy their business then I would want to make damn sure they weren’t going to set up again in the foreseeable future.

    Russel, it’s called a restraint of trade and nearly every business acquisition has it. If you don’t get it, you lower the price as you have no certainty about the future of the business you have bought. I acceopt that it might not apply to organic farming.

    There are plenty of court decisions around on what is a reasonable time for a restraint and what is not.

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  15. RF (1,271 comments) says:

    Eventually wee wussel Normans shade of green will slowly change to his true colour … Red. A potentially dangerous person who should never be in a position of authority in NZ.

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  16. scrubone (3,048 comments) says:

    This is what happens when you have people involved in politics who have no worldly experience.

    It’s not just politics. Did you see the discussion on sideswipe about carrying dogs in tow bar carriers?

    Or this.
    http://www.mikeroweworks.com/2012/09/the-first-four-years-are-the-hardest/

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