Chair Dr John Small talks ‘public benefit’ at OECD roundtable

In June this year, Dr John Small talked about the Commerce Commission’s approach to measuring the impact of its work at an Organisation for Economic Co-operation and Development (OECD) roundtable. Dr Small presented the Commission’s estimation that each dollar invested in the Commerce Commission delivers at least $20 in public benefit – enhancing competition and making an important contribution to the economy and the prosperity of New Zealanders.

We recognise there are different ways to compile these estimates and acknowledge the inevitable role of assumptions in this work. We’ve tried to be conservative in the sense of understating our estimates of public benefits. And we hope that by being transparent about our methods, interested observers will help us find ways to improve them. Similar analysis on impacts has been carried out by other competition agencies around the world, including the UK’s Competition and Markets Authority.

We know effective competition encourages businesses to innovate. This improves productivity and drives better choice and value to consumers. Some of that value is measurable now, but much of it is cumulative, building over time and helping future generations. This reflects our legislative purpose to focus on the long-term benefits for consumers.

This work is part of increasing transparency around what we deliver for New Zealanders.

At a glance

Over the 2024 year, the Commission has:

• Delivered an estimated $1.95 billion in public benefit.
• Delivered public benefits of at least $20 for every $1 of investment.

Estimated consumer savings by key areas of the Commission's work

The estimation comes from four key areas of the Commission’s work

• Monopoly regulation – $800m: using price controls to help ensure people get good value and reliable service from essential utilities such as electricity and gas.
• Regulation of semi-competitive markets – $290m: promoting competition so oligopolies the fuel, communications and retail payments sectors continue to perform in the interest of consumers.
• Fair Trading – $26m: ensuring consumers, including businesses, are informed, empowered and their interests are protected – via business penalties and consumer refunds.
• Competition enforcement – $830m: through our work on mergers and cartels, we help make sure New Zealanders get the benefits from protecting and promoting competition – like better prices, more choice, and new ideas.

Calculations explained

We estimated public benefits using established economic evaluation methodologies tailored across our functions. These include comparing regulated outcomes to pre-regulation benchmarks or industry arguments (e.g. in infrastructure), assessing market shifts and margin compression (e.g. in fuel), and applying international guidance and case studies (e.g. in fair trading, mergers, and cartels). Where directly calculating public value is harder, estimates are informed by sector trends and specific consumer protections. A full breakdown of the methodology is available on our website ( 2.4 MB, PDF ).

Additional benefits we have not included in our calculations

Several important areas of our work remain unquantified and are not yet included in our benefit calculations. This is because the work is new, there is some uncertainty, or there are challenges in applying a suitable methodology.

Areas of our work excluded from our public benefit calculation are:

• Impacts from grocery sector regulation
• Work to improve competition in banking and electricity
• Consumer education through fair trading initiatives
• The deterrence effect of our enforcement activities
• Other competition investigations work.

These areas are expected to deliver significant public value on top of the value we’ve calculated so far. Further analysis is needed to accurately assess their contribution

More to come

This work on our public benefit is important not just to drive improvement in the value we provide, but to increase transparency around our work.

We’re committed to making sure every dollar allocated to the Commission drives more competition in the economy and improves choice and quality for New Zealanders.

We’re participating in an international working group to further develop and sharpen our estimates of public benefit.

We look forward to developing this work further and reporting it to you. One thing we’ll focus on is how improving the pace and timeliness of our decision making can reduce costs to business and increase the benefit we provide. In the meantime, we welcome any feedback or comments you have on this report, our methodology, and how we can improve.

The Commission’s note to the OECD is available to viewopen_in_new.