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Public Trust's free will-making service threatened

The Public Trust's free-willing making service is threatened by changes to competition law.

Thursday, November 22nd 2001, 10:57PM

by Rob Hosking

The Public Trust could be one of the first firms caught by the government’s changes to competition law.

MPs on Parliament’s finance and expenditure committee have warned ministers that the Public Trust’s "free wills" service could be anti-competitive under changes to the Commerce Act which came into force in May.

The committee, which is considering changes to the legislation governing the Public Trust, heard submissions from numerous groups, including the New Zealand Law Society.

The Public Trust office was earlier this year taken to the Commerce Commission on the issue, but the commission ruled in favour of the government-owned agency. However that was under the old competition law.

The new rule replaces the term "dominance" with that of "substantial market power". Although this change is aimed primarily at companies such as Telecom, the government’s own agency could be caught by it.

"The bill beefs up the Commerce Act giving the Commerce Commission more teeth and bringing New Zealand in line with its key trading partner Australia," Minister of Commerce Paul Swain said in May

However it is those Australian precedents that have the committee worried. Several court cases across the Tasman have set down the rule that firms which do not necessarily have a large market share, but which do hold a strong advantage in the market place granted to them by statute or regulation, possess "substantial market power" and can be held to be anti-competitive.

The New Zealand courts are likely to use Australian competition cases as precedent as the new wording follows the Australian law so closely. Although the Public Trust holds only about 20% of the market for will making, the fact that most of its competitors are small law firms is also likely to weigh against it, the Law Society told the committee.

While the lawyers can be seen to be arguing its own case in this instance, the committee was impressed enough by the society’s arguments to warn the government in its report on the bill. This is despite the fact that the issue is really outside the ambit of the legislation, but is more concerned with how the Public Trust will operate after the bill is passed.

The politics of the issue are also trickier than under the old rules. Previously the Public Trust was forbidden, by regulation, to charge citizens for wills.

That rule is being repealed. Instead, now, the Minister in Charge of the Public Trust, Jim Anderton, has to purchase such services from the government agency each year. The free will service will be subsidised from general taxation, rather than paid for out of the Public Trust’s operating revenues, as has happened in the past.

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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