The Commerce Commission has released its first State of Competition report, providing an evidence-based assessment of how competition is working across New Zealand’s economy.
The report draws on a detailed analysis of 22 years (2001-23) of Stats NZ data from individual businesses to establish baseline competition measures for future monitoring.
Commerce Commission Chair Dr John Small said competition indicators present a mixed picture. The report found that while business concentration has reduced on average, competitive pressure has weakened in many parts of the economy.
Key findings include:
- Slightly reduced concentration across industries. This trend has occurred consistently over time, accelerating after the global financial crisis (GFC). This implies competition is improving.
- Business dynamism has generally declined. Rates of business entry and exit fell materially, and new entrants gained less early traction. This implies competition is declining.
- Some essential industries face limited competitive pressure, meaning weaknesses can ripple across the wider economy, especially when these industries are ‘upstream’ of other industries that rely on them. Other industries are improving, including rental, hiring, and real estate services, as well as parts of the broader services sector.
Dr Small said the decline in dynamism indicates a decrease in competition, which runs counter to the trend in concentration. This suggests that market conditions favour larger incumbent businesses; while smaller, newer businesses may be able to enter markets, it is harder for them to displace established players.
The report found electricity, gas, water and waste services, and financial and insurance services, are among the industries facing the weakest competitive pressure.
“These upstream industries are critical for our economy. Weak competition in these markets can mean higher costs and lower-quality services cascade through to businesses and households, increasing the prices people pay for everyday goods and services. That’s why work already underway to promote stronger regulatory settings and more effective competition is so important.”
While the report showed real strengths in parts, Dr Small added that it also highlighted the value of promoting competitive opportunities for a wider range of businesses, particularly for smaller and newer firms that appear to face greater barriers to growth.
“Competitive markets are critical to New Zealand’s economic performance. When competition weakens, innovation slows, costs rise, and consumers pay the price. A competitive environment enabling small businesses to grow is essential for productivity and long‑term growth.”
Although grounded in domestic data, the findings align with international trends. The OECD has observed weakening competition across many advanced economies since 2000. The findings also sit alongside persistent domestic challenges, such as low productivity growth and the planning and delivery of infrastructure investment.
According to Dr Small, competition agencies around the world are increasingly balancing law enforcement with more active tools, including access, interoperability, and non-discrimination requirements. This reflects a broader shift in how competition policy is applied in practice, including in response to the challenges of digital innovation and more complex markets.
In light of these challenges, the report is an important step in building the evidence base needed to promote fair, dynamic, and competitive markets.
This gives us the clearest view yet of how competition is working across the economy and provides a positive foundation to build on.
“As a diagnostic tool, it highlights where system‑level settings may need attention, and where competition settings may need to evolve as markets change, alongside the Commission’s ongoing regulatory and enforcement work.”
The Commission is making the underlying dataset available on its website. It has welcomed other perspectives and is looking forward to discussing some of the issues raised in the report at its upcoming Competition Matters conference later this week.
The analysis in the report provides a high-level, economy-wide picture. It does not replace the detailed, market-specific work the Commission undertakes in areas such as mergers or market studies. As with any broad assessment, there are limits to how far the report can capture competition issues in individual markets.
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