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Application of the public benefit test to the air New Zealand/Qantas case

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  • Tim Hazledine

Abstract

The proposed cartel between Air New Zealand was rejected by the NZ Commerce Commission, supported on appeal by the High Court. The case was an important and interesting application of the Net Public Benefit test in competition policy, under which the assessed costs or detriments of a determined substantial lessening of competition (SLC) are weighed against any offsetting benefits, for the purposes of authorisation. In this paper quantification of the detriments is shown to depend on the identity of those affected - consumers/producers; New Zealand/Australian/foreign. Impacts on the long-run performance of markets and on related markets were claimed and are evaluated. The basic legitimacy of the public benefit test in this context is assessed, in terms both of the purpose of the NZ anti-trust legislation and of the economics of long-term market performance. The much simpler traditional SLC-focussed implementation of anti-trust might perform better overall.

Suggested Citation

  • Tim Hazledine, 2004. "Application of the public benefit test to the air New Zealand/Qantas case," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 279-298.
    • Handle: RePEc:taf:nzecpp:v:38:y:2004:i:2:p:279-298
    DOI: 10.1080/00779950409544407
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    References listed on IDEAS

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    1. Lewis Evans, 2004. "The efficiency test under competition law and regulation in the small distant open economy that is New Zealand," New Zealand Economic Papers, Taylor & Francis Journals, vol. 38(2), pages 241-264.
    2. David Haugh & Tim Hazledine, 1999. "Oligopoly behaviour in the Trans-Tasman air travel market: The case of kiwi international," New Zealand Economic Papers, Taylor & Francis Journals, vol. 33(1), pages 1-25.
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    Cited by:

    1. Hazledine, Tim, 2006. "Competition Policy for the Trans-Tasman Air Travel Market: the 2005 ACT Decision and its Implications," Working Paper Series 3836, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    2. Hazledine, Tim, 2006. "Competition Policy for the Trans-Tasman Air Travel Market: the 2005 ACT Decision and its Implications," Working Paper Series 18931, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    3. repec:vuw:vuwscr:18931 is not listed on IDEAS

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